Home, Sweet Home under Section 8
The US government is determined in eliminating the problem in substandard or unsafe living accommodations of families. Thus, the Section 8 program was developed to aid low-income families, the elderly, and disabled individuals in achieving safe and livable homes. To achieve such goal, the government is partnering with local housing authorities and landlords, who may receive incentives.
The US government constructed a number of multiple-unit buildings for poor and needy families. To allow low-income families to afford homes outside the public housing system, they made amendments to the original public housing plans and adopted the Section 8 Housing Choice Voucher Program. Section 8 offers more freedom to both landlords and tenants, allowing more people to get their own homes in their own terms. With Section 8, families can now choose to live in private homes that are located in more secure and safer areas.
To gain eligibility for housing privileges under Section 8, the applicants should satisfy the necessary requirements and qualifications by the renters. They may be approved immediately or added to a waiting list depending on the availability of housing units.
Public housing agencies play a great role in the successful implementation of Section 8. They may offer preferences to the applicant families, including those living in substandard homes, involuntarily displaced, or paying extremely high rental fees. Then, the public housing agencies, landlords, and tenants meet and discuss their terms of agreement, including their specific roles and duties.
Over the years, the Section 8 program has been funded by the federal government to pay for a substantial portion of the housing costs for the poor. As a result, the program has attained remarkable improvements. For instance, the program has reduced the poverty rate by helping families in managing their finances and thus in elevating their social status. Transferring to areas with more conducive living conditions also reduced crime rates as people have found safer homes for their families. They also gained access to neighborhoods with excellent school systems and high job opportunities.
In the end, Section 8 enables low-income families to achieve their homes with help from public housing agencies and tenants in different states.
Advantages and Disadvantages of Section 8 Investments
Among real estate investors, Section 8 housing program is among the most controversial. To this day, they are debating the good and the bad that come along when you have rental properties that are approved by the US government to provide subsidized housing for low-income Americans.
So what's the controversy? If it is whether Section 8 housing is a good real estate investment. Asking different investors will get you a number of conflicting views. Doing your own research can lead to success in this venture, as those who know and have a lot of experience regarding this program tend to do very well. This is in comparison to those who fail because of lack of preparation that can carry them through any delay of cash flow.
First and the biggest advantage, is the guaranteed and stable payments. Since you will be receiving part, if not all, of the rent payment from the government, you are guaranteed a steady flow of rent payments. There may be a delay of about 30-60 days at times, but these payments even if they may sometimes be late, are more reliable than those that come from a non-Section 8 tenant.
And did you know that the Section 8 program allows landlords to have annual reassessments with regards to rent and are allowed to increase what they charge to tenants? This is another advantage that you cannot easily get with non-Section 8 rentals.
As part of the requirements for Section 8 tenants, they must take care of the rental property, yet another advantage of having a property under Section 8, the easier maintenance of your investment property. And just a helpful tip, if the property is in excellent condition at the time the tenant moves in, they do not have a reason to have excessive wear and damage to the property.
A rental property under the Section 8 program also gives the landlord a bigger pool of prospective tenants. Especially in location where private pay tenants are much less. And if the the Section 8 tenant likes the property and the management? You got yourself a long-term renter. Which turns to bigger profits because of lower vacancy rates.
There are definitely more significant advantages to Section 8 housing that any real estate investors should consider. However, like many things, it also has its disadvantages and risks. Including, but not limited to delayed payments, government accounting delays, and strict and costly inspections.
If your property well-maintained, is in a good location, and you want higher profits, you’ll most probably make more money renting it to private individuals.
If you do decide to invest in Section 8 housing, you just need to make sure that you understand all of its advantages and disadvantages, in addition to having a solid plan to make a profit.