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5 Cons of Renting to Section 8 Tenants

So after reading our recent article on the benefits of renting to Section 8 tenants, you might be seriously considering this option. However, at Bay Property Management Group we want you to have a complete 180-degree view of this new venture before you jump into it. This is why today we’ll discuss some of the drawbacks of accepting Section 8 tenants. Yes, there are a few worth consideration.

You might have to lower your rates

Because the Department of Housing and Urban Development (HUD) pays a great deal of the Section 8 tenant’s rent, it has a say in the final decision on where a tenant gets to live. If the housing authority feels like your property is overpriced and you unreasonably charge more than other landlords in your area, HUD may ask you to lower the rent or they have a right to disapprove your property based on this condition. Additionally, both HUD and tenant may request other financial bonuses, such as a smaller security deposit.

Expect some wear and tear

There are good and bad tenants regardless of whether they apply under Section 8 or have a perfect credit score. Accepting Section 8 tenants doesn’t mean you’ll be dealing with poor-mannered, irresponsible people who won’t take care of your property. Of course, there are a few bad apples in every batch, which is why you shouldn’t ignore your standard tenant screening procedures.

Consider this: many Section 8 applicants don’t work at all or work part-time, which means they’ll be spending a lot of time in the house. Even if they take a good care of things, you can expect a bit more wear and tear than you would have from a full-time employed tenant.

Housing Departments are not created equal

Every landlord has a different experience with the housing authority. In some areas, local HUD is helpful and understanding, in others – slow and uncooperative. If something goes wrong, you are essentially at a mercy of a government employee who, in many situations, sides with the tenant even if he or she is in the wrong.

Our Baltimore property managers have heard about cases when a tenant would completely trash the property and the housing authority wouldn’t do a thing about it, worse yet – let the tenant move on and destroy their next place of residency. We don’t know about how dependable HUD is where you live, but if you have questions about housing authority in Maryland and, specifically, the Baltimore area, feel free to call us!

Annual inspections

Of course, as a landlord, you conduct your own property inspections on an annual or maybe even quarterly basis. When you apply to get your housing Section 8 certified, it has to pass an initial inspection and then one every year. The tricky part is, if HUD finds something wrong with your place, you only get 3 weeks to fix it before the re-inspection or your house will be disqualified.

Depending on the number and complexity of fixes, you might end up paying a hefty amount for urgent services and even repairs that are supposed to be tenant’s responsibility. There is no arguing with HUD, so if you don’t complete the repair in the designated timeframe, you property might be kicked off the problem.

You are bound by the contract with the government

Besides the lease with the tenant, you now have to sign a Section 8 contract with HUD. This contract is rather restricting and significantly limits your authority and rights as a landlord. Instead of dealing directly with the tenants, you have to deal with the third party – a government middleman – which typically slows down and complicates the business. You may expect to fill out a lot of paperwork and waste time waiting for applications to be processed and approved, inspections – scheduled, tenants – qualified, etc.

Here are a few examples of the restrictions Section 8 contract puts on you:

–    HUD has the access to all your records pertaining to a particular Section 8 unit and can request to view them at any time;

–    HUD determines the amount of the security deposit you may request – typically not more than 1-month rent;

–    You might need to install additional appliances, exits or safety devices to pass the inspection.

–    Evictions are only possible in case of tenant violating the lease or Section 8 conditions and are handled through the court.

Hopefully, by now you have the full picture of what it takes to rent to Section 8 tenants. There are undeniable benefits and a few drawbacks as well, so choose wisely. It’s the matter of whether the consistency of payments and a large pool of applicants are worth the low rent and third-party control. As far as property management in Maryland goes, we’ll be happy to give you advice, but if you are from a different area, try contacting your local property management companies to find out how much luck they had with Section 8.