John, you’re confusing the hell out of everybody! First you said you can’t find Sec. 8 tenants who have all their first month’s rent to move in–which caused Kristine, for one, to rightfully say “something’s not right here.”
Now you’re saying Sec. 8 pays for first month’s rent, but tenant has to pay “their” portion.
Portion of what?? The rent? The deposit? You just said Sec. 8 pays the rent. Oh, so then “tenant’s portion” must mean the security deposit. Oh, but wait! Kristine said that under Sec. 8 tenants only pay 30-40% of their income in rent. I’ve had several Sec. 8 tenants through the years, and only one had their ENTIRE rent paid by Sec. 8. Therefore, unless your local Sec. 8 office is operating differently than mine–unlikely–and unless all or a majority of the Sec.8 tenants in your locale are so flat broke they qualify for 100% rent payment by Sec. 8, your statement that “Section 8 pays for first months rent” is ludicrous! Most likely, they pay A PORTION of the rent, not “the rent.” Furthermore, all Sec. 8 leases are for an initial one year term, so why are you mentioning “first month’s rent?” What about the second, third, etc. month’s rent? Aren’t those important, too? Okay, I get it. Your Sec. 8 office probably pays only the first month’s rent, and after that the tenant pays it all, or a portion? Riiiight!
Speaking of Lease Options, I also “hearing good things” about this technique, until I discovered that people who would consider buying with Lease Options generally do NOT like to live in lower or lower middle income areas! So, if you have a house in one of those areas that you’re trying to sell with a L/O contract, don’t get your hopes up. It’s a technique that seems to be only possible in better neighborhoods where people aspire to live, not where they have to “settle” because that’s all they can afford. At least that’s been my experience.
Posted by michaela-CA on June 19, 2010 at 14:01:02:
Edwin,
In fact, section 8 does work differently in different areas.
In Atlanta the Housing Authority will tell you how much you can get for your property from them. You’re not allowed to ask for more from your section 8 tenant.
The property has to be approved by an inspector and will get points according to the amenitites (things like mini blinds, HVAC, dishwasher etc will get points) other things may be responsible for deduction of points. It will get a rating from A-F and will awarded a certain amount based on the rating and the number of bed/bathrooms. Any house that has a boarded up house on the same street is not eligible for section 8. So, one boarded up foreclosure can throw out a whole street from section 8 eligibility.
Posted by Kristine-CA on June 19, 2010 at 23:25:43:
Michaela: S8 works the same here. The “payment standard” set by the
local housing authority is the maximum allowable rent for a particular
unit, based on size of unit and fair market rents. Many S8 tenants are
required to pay a portion of their reported income as part of the
rent…that’s how the they qualified and applied, by showing their
household income. If the S8 allowable rent is $1500, and the tenant is
required to pay $450 towards the rent, you get $1050 from S8 and
$450 from the tenant. The tenant’s portion is just like any other
rent…it has to be on time or it’s cause for eviction.
There are complications in rent controlled areas in CA that have
special rules for S8 evictions for failure to pay. And there are now
special complications in those areas for S8 evictions/terminations of
leases after foreclosure. Except for those, S8 is a good deal for many
LLs in CA. Problem is lack of vouchers.
That bit about the boarded up house…I’m wondering if that is a local
ruling only. That doesn’t sound like the feds, and in my farm it would
mean a lot of cancelled S8 contracts, which hasn’t happened.
Kristine, I find that hard to believe. Sec. 8 is a Federal program that I think would have universal regulations the same throughout the country. Of course, each region is not going to pay the same for a 2 bedroom place, for example. I never knew about that A-F rating system and the points. I’ve always been told the rent they will allow has to be “comparable” to asking rents for similar units, which can be a rather loose definition when you’re trying to compare one property with others. You’re right, you cannot charge the tenant more rent than Sec. 8 allows, but you can charge for extras like providing lawn service, certain appliances, selling them an option to eventually purchase the property, etc. By the way, I don’t think it’s technically called “Section 8” anymore. I believe now they like to refer to it as the “Housing Choice Voucher Program.” Whatever. I imagine people will still be calling it Sec. 8 20 years from now and nobody will be confused.
Posted by michaela-CA on June 20, 2010 at 10:36:27:
kristine,
In Atlanta the tenant does not pay part, but everything is being paid by section 8 - at least that’s how it was a few years ago.
As to the boarded up houses - as I wrote before there are different ways of doing things in different areas.
When they changed it to that format (early 2000’s sometime) it created a ton of problems for those longtime section 8 landlords, as they were mainly in so-so neighborhoods. In 2000 the Real Estate market in Atlanta crashed and rehabbers and builders couldn’t sell their homes. So, they ended up offering them to section 8. Now HUD has a ton of very nice houses to choose from. Together with those new rules, it made many longterm section 8 landlord pretty unhappy, because now they could only find tenants from the normal tenant pool and the rents were a lot lower and not guaranteed. Lots of landlords lost their shirts.