What are the biggest Section 8 benefits and drawbacks for landlords? Learn the answer as we analyze Section 8 pros and cons for landlords here.
The biggest Section 8 benefit to landlords is also the most obvious - The government paying you at least 60% of the rent every month. Nothing beats guaranteed and effortless rent collection paid like clockwork.
By considering Section 8 renters, you will also expand your pool of potential tenants. This makes it easier for you to find an excellent tenant. This is especially true if your rental home is targeting tenants with lower incomes.
When screening tenants, you need to choose someone who is able to afford the remaining (30 to 40%) of the rent and won't violate your lease terms - Click here for the proper steps to screen a tenant (Section 8 or not).
While we're on the topic of Section 8 benefits and errant tenants, you will be pleased to know that most Section 8 tenants have an added incentive to play nice according to the rules.
It's not easy to qualify for subsidized housing - There is a long waiting list and strict requirements to meet. The last thing a sensible Section 8 tenant will want to do is to chalk up a poor rental or eviction record and risk losing his or her precious Section 8 vouchers.
While some landlords find Section 8 inspections to be a hassle, other consider it to be a Section 8 advantage for landlords. They view it as a free home inspection conducted by a professional inspector.
For some landlords, Section 8 landlord benefits extend beyond financial ones. They derive personal satisfaction from providing housing for the poor and needy. Since the demand for Section 8 housing outstrips the supply in most areas, they are providing a valuable community service.
If Section 8 sounds so attractive to landlords, why is there still a shortfall of Section 8 housing in most areas? Let's take the time now to examine the Section 8 disadvantages and drawbacks for landlords:
While Section 8 does grant landlords and tenants more freedom and rights compared to other government subsidized housing programs, it is still more restrictive than renting your property to private tenants.
One important example is the amount of rent you can charge Section 8 tenants. Most housing authorities will impose a maximum rent amount based on Fair Market Rents for the area and the tenant's income (rent cannot exceed 40% of tenant's earnings).
Another big issue is the tenancy type and period. All Section 8 leases have to be a fixed term tenancy lasting 1 year or more. If you want a lease that offers flexibility and ease of termination (e.g. month to month lease that can be terminated by giving a 30 day notice), then this will be a big Section 8 drawback for you.
As we have mentioned above, your property has to pass a home inspection that is conducted not just before move-in, but once a year as well. For the specific criteria of this inspection, Click here for our guide to HUD housing quality standards.
After you submit your request for tenancy approval form, you may have to wait up to one month before PHA sends their inspector down to your rental home. If your rental home is sitting vacant during this waiting period, you can rake up thousands of dollars in vacancy losses.
Now that we have fully covered the pros and cons of Section 8 for landlords, let's move onto other important Section 8 topics:
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