As a landlord, the goal is to rent your property quickly to tenants who will pay in full and on time. Therefore, one way to increase the applicant pool is to become a Section 8 landlord. By working with the Pennsylvania Housing Authority, owners can get approved for a housing program for low-income families and still receive the full rent. However, one key difference is a portion of the rent will come from the state. So, is becoming a Section 8 the right choice for your rental portfolio? Continue reading below as we discuss the process of becoming a Section 8 landlord in PA, along with the pros and cons and tips to be successful.
What is Section 8 Housing?
Section 8, otherwise know as the Housing Choice Voucher Program is an affordable housing program funded through the federal government’s Department of Housing and Urban Development or HUD. This program helps low-income families and individuals along with elderly and disabled persons suitable housing in counties and metro areas across the United States.
Suitable units can include multi-family subsidized housing, townhomes, condos, and single-family homes. Rental homes must first go through an approval process with a local housing authority. After which, participants can choose their own rental housing unit. To qualify, participants must meet certain income and eligibility requirements through the housing assistance program.
Who is Responsible for What in Section 8 Rental Housing?
When a landlord rents a unit to s Section 8 tenant, they enter into a lease as they would with any new tenant. However, with the addition of the Housing Authority comes added responsibilities. Let’s review the roles of a landlord, tenant, and housing office in a Section 8 contract below.
- Meet or Exceed the Housing Authority Quality Standards
- Provide Safe and Sanitary Housing
- Accept Reasonable Market Rental Rates
- Maintain Standards of Living for the Duration of the Lease
- Provide Agreed Upon Services per the Lease
Section 8 Tenant’s Obligations
- Accept a Minimum 12 Month Lease
- Pay a Security Deposit to the Landlord per the Lease
- Comply with all Lease Terms and Addendums
- Maintain the Rental Unit in Good and Sanitary Condition
- Report Maintenance Issues Immediately to the Landlord
- Pay the Tenant Portion of Rent in Full and On-Time
- Inform the Housing Authority and Landlord of any Financial, Familial, or Occupant Changes
Housing Authority’s Obligations
- Evaluate the Voucher Applicant’s Income and Family Composition Annually
- Inspect Rental Units Annually
- Assist Applicants in Locating Suitable Housing
- Facilitate Payments to Landlords for the Housing Authority Portion of the Rent
- Ensure Both Landlords and Tenants Follow Program Rules
How to Become an HVC Landlord in Pennsylvania
In Pennsylvania, the Section 8 landlord requirements are pretty straight forward. As long as landlords follow the correct process and supply all of the necessary documentation, they can accept Section 8 tenants. However, before taking vouchers, landlords must complete the following steps with the local Housing Authority.
- Attend a Landlord Briefing
- Complete Owner Certification Training
- Prepare Documents
- List the Property
Attend a Landlord Briefing
Step one to become an HCV landlord is to attend a free PHA/HCV Landlord Briefing. Landlord Briefing is mandatory for all first-time owners in the program. Due to the COVID-19 pandemic restrictions, these Orientation Sessions are held virtually, and owners may register for a spot on the Housing Authority’s website.
Complete Owner Certification Training
The next step is registering for free and mandatory HCV Owner Certification Training. Certification Training aims to familiarize owners with the rules and responsibilities of participating in the program. Additionally, practical advice helps owners learn how to use the program and be successful effectively. Due to COVID-19, this training is held virtually, and owners may register on the Housing Authority website. Also, failure to complete this training is considered non-compliance with the Housing Choice Voucher Program.
Gather all of the required documentation per the Housing Authority, including, but not limited to, the following:
- Rental License
- Deed of Record
- Landlord’s Photo ID
- W-9 Form
- Direct Deposit Form
- Proof that Property Taxes are Current
- Evidence that Utilities are Current
- Agent Authorization Form (Needed for Professionally Managed Properties)
- Owner/Agent Contract (Needed for Professionally Managed Properties)
- Agree to Accept Direct Deposit Payments (Needed for Professionally Managed Properties)
List the Property
Once the property has been marketed, applicants screened, and the tenant is chosen, it is time to move on to the inspection and lease process. So, follow along with these steps below –
- Complete an Application and Get the Rental Rates Approved
- Get the Rental Unit Inspected and Approved by a PHA Inspector
- List the Property in the Section 8 Database and Complete a Lease Agreement
Pros and Cons of Becoming a Section 8 Landlord in PA
As with any business decision, rental owners must weigh the pros and cons before becoming a Section 8 landlord in Pennsylvania. Therefore, to help with your decision, check out our list of important considerations below.
Pros of Being a Section 8 Landlord
- Consistent Rent Payments – Since the government is subsidizing the rental, landlords are guaranteed all or part of the rent each month. Additionally, Section 8 tenants are motivated to pay their share because they will lose their vouchers if they do not.
- Pre-Screened Tenants – One myth surrounding Section 8 properties is that you get low-quality tenants. The truth is that to receive housing vouchers, the tenant goes through a pre-screening process by the government. The Housing Authority screening process includes a criminal background check, drug testing, and verification of income. However, keep in mind this should not take the place of a landlord’s own screening process.
- Increased Listing Exposure – There is an extensive database of tenants in Pennsylvania just looking for Section 8 properties. HUD and other local Housing Authority sites offer free websites to advertise dedicated Section 8 housing. In turn, this helps landlords reduce marketing costs and get the rental listing in front of more applicants.
- Lower Vacancy Rates – Unfortunately for tenants, many areas face supply shortages of suitable Section 8 housing. So, when vacancies occur, they fill quickly, and those who enjoy their rental home tend to stay! This is a plus for landlords worried about frequent and expensive turnover costs.
Cons of Being a Section 8 Landlord
- Rent Price Caps – Landlords must realize that HUD will determine the maximum allowable rent based on various factors. For example, if an owner lists a property for $1300 and HUD determines the maximum rent for the same bedroom count in that area is $1250, then the maximum a landlord can charge a Section 8 tenant.
- Delay in 1st Month’s Rent – With Section 8, the first month’s rent is not paid to the landlord until after the tenant has moved in. This practice may be new to landlords used to collecting the security and first months rent before the move-in. Therefore, an owner must financially sustain the property until the rent comes in.
Property Inspections – To qualify for and maintain a contract with the Section 8 program, landlords must undergo routine property inspections to ensure tenant safety. Some landlords can find these inspections and regulations cumbersome.
Tips for Successfully Renting to Section 8 Tenants
- Know Your Location – Not every location is ideal for landlords seeking Section 8 tenants. If the rental property is located in a high-income area, the rental rate may be well above what HUD is willing to pay. So, properties in low to moderate-income areas are best suited to subsidized housing. Therefore, research the local market carefully before deciding what is right for your investment.
- Follow All Federal and State Laws – Property owners must comply with state and federal Fair Housing Laws. Furthermore, properties must meet minimum compliance and upkeep standards. That said, maintaining these standards is just good practice whether owners rent to Section 8 or market tenants.
- Thorough Tenant Screening – Create a standard set of rental qualifications and apply those to all tenants. Consistent tenant screening is a vital part of Fair Housing Law compliance, and the standards should remain the same whether the tenant is subsidized or not. Typical qualifications include background screening, income verification, rental history, and credit checks.
- Hire Professionals – Whether an owner chooses to seek approval for subsidized housing or stick with market tenants, there are many rules and regulations to follow. Keeping up with local laws while effectively marketing a property is a time-consuming endeavor for landlords. However, enlisting the help of a qualified professional management company gives owners valuable peace of mind.
At Bay Property Management Group, we can take care of all of the Section 8 paperwork each month, so you can focus solely on watching your investment grow. If you have a rental property in Philadelphia or surrounding PA counties, including Montgomery, Delaware, Chester, Bucks, and other nearby counties, contact us to see how we can help!