Talk to a group of Oakland landlords and real estate investors and you’ll find they are split on whether or not it’s a good idea to invest in Section 8 housing and rent to Section 8 tenants. While the program can sometimes be challenging to manage and navigate, it can also give you reliable rental income on a property that’s likely to have a stable pool of tenants willing to live there.
With a little extra information and an understanding of how the Section 8 program actually works, you can make your own decision about how you’re going to handle properties and tenants that qualify for it.
Understanding the Section 8 Program
Section 8 has been around since 1937, when the federal government began to provide housing assistance to people who could not afford to pay rent on their own. Today, it’s a voucher system also called The Housing Choice Voucher Program. Under this program, landlords rent properties to qualified tenants at lower market rates. Then, the program kicks in the remaining rental payment that goes beyond what the renter can afford. It’s a federal program managed and funded by the Department of Housing and Urban Development (HUD) and administered by each state’s public housing authority.
Becoming a Section 8 Landlord
Landlords who want to rent to Section 8 tenants must become approved by the housing authority. The rent that you charge will also need to be at or below the fair market value that HUD establishes. You’ll receive a subsidy from the local housing authority, and the amount of rent that isn’t paid by the program will come directly to you from your tenants.
Project-Based and Tenant-Based Section 8 Programs
There are two different ways that Section 8 programs work. The tenant-based program attaches the funding to the tenant, and the money will move to wherever the tenant lives. There are more Section 8 tenants than there are Section 8 properties, so Oakland has a waitlist that tenants who need Section 8 can apply to be on. Tenants who receive a Section 8 voucher must follow strict guidelines or lose their eligibility.
Project-based Section 8 is when a specific property is designated for Section 8 tenants. In this case, the housing benefits stay with the property, even if a tenant moves. The landlord must qualify for the program separate of the tenants who may rent the home.
Section 8 Depends on Federal Budgets
An important thing to note when you’re considering Section 8 properties and/or tenants in Oakland is that the program depends on the federal budget. Substantial cuts in low-incoming housing initiatives could leave the program dramatically underfunded. The Oakland Housing Authority has several of its own voucher programs outside of Section 8 to meet the community’s need for affordable housing. These include programs for veterans, foster children, and non-disabled elderly populations.
If you want to become a Section 8 landlord, you’ll need to apply through the Oakland Housing Authority. Your property will then need to be inspected and approved before it’s rented out to Section 8 tenants.
We’d be happy to tell you more about Section 8 and discuss whether this program would be something your property might benefit from. Please contact us at Vision Property Management for more information.