A question many Baltimore County landlords struggle with is whether to accept housing vouchers or not. At the end of the day, it can be beneficial for a few reasons. Should you accept vouchers? That depends on what you think after running the pros and cons. Learn more about what renting to section 8 means, the pros and cons of accepting vouchers, and how to become a section 8 landlord.
What Are Section 8 Housing Vouchers?
The Housing Choice Voucher Program is a government-funded program to pay the rent of those in need. Landlords will have to rent at fair market prices. Generally, section 8 will cover the entirety of the tenants’ rent. This is paid via mailed check or direct to the landlord’s account. In some cases, individuals qualify for the voucher, but not the whole voucher due to income. That tenant is then responsible for paying a percentage of rent. There are rules and regulations put in place so that the tenant pays their portion or risks eviction.
- Consistent government paid rent: Although these tenants may be low-income, the government pays their rent which means rent payments will be consistent and on time.
- Constant tenants leading to lower vacancy rates: Due to the government consistently paying rent, generally the eviction rate can be lower which in return leads to a much better vacancy rate at your property.
- Pre-screened tenants, background checks, and often drug tests: All landlords should screen tenants regardless of their self-reported income. However, the government’s pre-screen progress is even more rigorous for section 8 tenants and even includes regular drug testing. This can give a landlord some reassurance that their tenant is not a criminal and is capable of paying their part of the rent (if applicable).
- Business scholarships: By participating in accepting section 8 housing, landlords can receive scholarships for their business. This is especially good for smaller property management companies or landlords starting out. Yet, who doesn’t like free money? It is a great benefit for landlords and property management companies of all sizes!
- Rental price regulations: You won’t be able to set higher than market price rents for your section 8 properties. With that said, your regulated rent prices have little to no flexibility (at least at the properties where you decide to accept section8).
- Risk of lower-income tenants: This is obvious as the program is for those of low income. The fact that the government helps pay their rent is a pro, but there can still be cons to low-income residents. For example, those that don’t follow the rules and pay their percentage of the rent will be evicted leaving you with a vacant unit. We do know that low-income individuals tend to struggle more with eviction.
- You don’t receive income until the tenant physically moves in and HUD doesn’t cover a security deposit: No rent will be received until the tenant is physically in the unit and you can’t ask for money in advance or a security deposit (it won’t be covered by HUD).
- Potential for difficult tenants: There is a higher potential for difficult tenants when allowing low-income tenants to live at your property. Sometimes they are low-income due to losing a job because of criminal activity or other instances that cause them to be at risk for trouble. In addition, these tenants are either not paying their own rent or paying very little, so they might not be as inclined to take care of your property. This could lead to damages and dirty units.
How to Become a Section 8 Landlord
If you decided that the pros outweigh the cons for you as a landlord, keep reading! Once you decide to go ahead with this, there is a process for becoming a section 8 landlord. The process is as follows:
- Contact the local Baltimore County Housing office and request more information and/or to apply. To apply you will need your ID, property location, and the asking rent for that property.
- You will need to get a certified housing inspection and it must pass the housing quality standards. Ask the housing office for any specific items they will need to be checked off during the inspection as sometimes it goes beyond the regular scope of a routine inspection.
- Finally, once you are approved you can begin accepting vouchers! The housing office helps to market the vacancy to low-income individuals that qualify for the housing voucher.
The bottom line is that like anything else, accepting housing vouchers has pros and cons. It could be very beneficial for small property management companies, self-employed landlords, or those that want to do some good in the world. However, it is imperative to make sure your property/company is set-up to handle any and all risks that may occur from accepting vouchers. Also, be sure you are financially stable enough to let the government regulate the rent prices.
Need to learn more about housing vouchers or rental property management in Baltimore County? Bay Property Management Company is a third party property management firm with plenty of experienced staff members to assist with your Northern Virginia property management needs. We proudly offer services throughout Maryland, Pennsylvania, Washington DC, and Northern Virginia. Follow our property management blog to learn more about the industry and keep up with new information!