Section 8 of the Housing Act of 1937 (42 U.S.C. § 1437f), also known as “Section 8”, authorizes the payment of rental housing assistance to private landlords on behalf of approximately 4.8 million low-income households. The largest part of this law is the Housing Choice Voucher program which pays a large portion of the rents and utilities of about 2.1 million households. The program is managed by the U.S. Department of Housing and Urban Development. So how does Section 8 work?

Getting started

In order to own and operate a Section 8 rental, the first step is for the local housing authority to approve both the landlord and the property. Different housing authorities may have their own requirements but, in general, nearly any landlord can utilize the Section 8 program. You will need to complete an application to be a part of the Section 8 program as well as provide some personal information. The government will take a hard look at the rates on your units, as they have to fall in line with Fair Market Rent (FMR) guidelines (this is a book created by the government that defines what they think rents should be for each property type and size). If the housing authority feels that your rents are too high, they make require you to lower them to participate in the program.

Once you are initially approved, you have to have a property inspection

The housing authority makes a mandatory inspection of your property to ensure that it meets all requirements of the program. It is pretty exhaustive and will include working locks on every window and door, structurally solid, with safely working plumbing and electrical. You may need to upgrade your heat and A/C to be allowed into the program, as well as potentially build handrails and/or safety ramps outside the property for residents who are disabled.

Rarely are any issues identified in these inspection reports that the landlord cannot address immediately and with reasonable cost. It’s no cause for concern if you do not pass on the first try.

Renting out your units

Once you and the unit have been approved by the housing authority, it’s time to get down to business of finding a resident. Contrary to what you may think, the government does not just fill Section 8 units for you – it’s important to market them just like you would any rental. But the shortage of housing in this category should more than do the trick.

When you find a tenant that want to rent under the Section 8 program, you complete a lease with them. Then, once a month, the housing authority will mail you a check for roughly 70% of the cost and the resident will have to pay the balance. It’s always a good idea to contact your housing authority just to make sure that the lease is exactly as they want it and that the resident is fully entered into the system for payment. They can also tell you when to expect a check.

On-going

That’s about all there is to it. From that part forward, you operate the Section 8 unit the same as you would any other – collecting money and making repairs. However, there is one final element: the regular inspections of the unit to make sure that it conforms to the housing authority’s requirements. You should contact them to inquire as to the frequency and advance notice of these inspections. If you do your regular maintenance, there should be no surprises in these inspections.

Conclusion

Renting units through the Section 8 program is not that complicated or difficult. It just basically gives you one more option in your arsenal of strategies to fill vacant units. In some areas of America, this one door can open up a huge additional renter pool. Now you know the basics.