It is not illegal nor fraudulent to lease option a property to a Section8 tenant (if done correctly).
Will they actually buy the property? Most likely not…why pay for something when Obama will just continue a good things?..
It is not illegal to rent another portion of the property out to the tenant…like a shed or garage or wellhouse, dogkennel, driveway, whatever. This generates additional rent that is not on the rental side of the equation.
You must be careful though, if Sect8 demands all documents pertaining to the tenant in writing, then you need to give them everything.
I currently don’t have any Sect8s who are buying on Option, but I won’t shy away from it. Some are very well-meaning people and actually use the system for what it was meant to do: be a temporary helping hand.
They are going to school and graduating and bettering themselves where eventually Sect8 doesn’t need to pay them to live somewhere. These tenants I want to turn into buyers. Rare, but they are there.
Also, if Sect8 doesn’t pay enough for your rent price, you can also use the above method as a means to get higher rent without invalidating the Sect8 agreement.
I am not an atty, please don’t use my advice without any atty advice…blah, blah, blah.
I have read much of the archives regarding both Section 8 and L/O. What have you guys been using the most recently? I have a completely rehabbed house and am trying to figure out which one technique to use. I have a 3/1 which Section 8 in Columbus, OH can get up to $750 and the area I am in I feel that I can probably get $700 off of a L/O a month. I would receive the option money but I can go with guaranteed money from the government with Section 8. What are everyone’s thoughts about this?
S8 is not a strategy in itself. all it means is that you will make your rental units available to S8 tenants, should any happen to want to rent your house.
here are some lessons I hav learned about S8 over the past 8 years. I have worked with 10 different housing agencies, and at least 100 vouchered tenants. Currently, I have about 21% of my gross rents coming in on vouchers.
NEVER depend on S8 for tenants or rent. You cannot rely on them. You cannot control the supply of vouchers or the funding from HUD. My rents from S8 have been as high as 50% and as low as 11%. and S8 are welcome in all of my units.
others have hit the “guaranteed” illusion. no such thing. just wait until a new S8 tenant trashes your unit and leaves after one month. think you’ll get the entire year’s rent? think the agency will reimburse you to repair your unit? think again.
According to my experience in HI, the tenant pays a portion of the rent and the government pays the rest. The amount the tenant pays depends on his/her monthly income.
Therefore, Section 8 does not guarantee 100% of the rent. Your tenant still may be late his/her portion of the rent, which happened to our property. And, the government portion of the 1st month’s rent may be delayed until the next month because of the paper work.
Then, of course, your tenant can move out anytime he/she wishes witin the terms of the annual lease agreement.
You have a better peace of mind with a Section 8 tenant. But, I would not say it is “a guarantee.”
In my experience, most options are not exercised. Yes, I got to keep the option $$$, but in my area don’t even have option money. In fact, they don’t even have move-in ca$h. For the 1st time in 28 years I’m financing security deposits. I’ve even got an ad offering a FREE month’s rent (pay on time for 12 mo. & I’ll give you the 13th month).
Section 8 has changed; I’m no longer being guaranteed a year’s rent. I am tied up for a year, but the tenant isn’t (which is pretty much the way any lease goes, & that’s why I only offer month-to-month to non-Section 8 tenants. In the past 2 months I’ve had 2 HUD tenants bail on me. They didn’t even care that the program then dropped them because it was only paying a small percentage of the rent. I much prefer tenants who receive disability. They are often older, & their monthly incomes, though limited, are reliable. One of my tenants has been there 11 years. Another advantage over Section 8 is that I don’t have to deal w/lazy queen bee caseworkers who scream at me over the telephone. I’ve always tried to make both my rentals & residences as accessible as possible. It often doesn’t cost any more–just takes a little forethought.
Because I don’t know your neighborhood I can’t really advise you except to tell you that (1) careful research is mandatory, & (2) it’s going to be a l-o-n-g c-o-l-d winter for tenants & landlords alike.
Am I correct that you are saying - Posted by Rich-CA
Posted by Rich-CA on October 15, 2008 at 18:15:57:
you want to lease option a property back to a Section 8 tenant? I am almost certain Section 8 will not allow this. They are a Federal program and have no flexibility to do anything outside the regulations. This is normal for all government programs and why those who feed at the government trough are very specialized in what they do. Like a mosquito is specialized in the removal of blood from a host.
