The U.S. Section 8 program aims to alleviate homelessness for low-income families, those with disabilities, and the elderly. In 2023, the federal government set aside $30.3 billion toward this initiative.
Under the Housing Act of 1937, these funds will pay up to 70% of rental amounts due by qualifying Section 8 tenants.
If you opt to become a Section 8 landlord, this guarantees you'll receive most of your rent on time every month. It also means you're contributing toward alleviating poverty in your neighborhood.
Keep reading to find out what you need to know before you sign up.
Important Section 8 Criteria
There are two types of housing assistance available to Section 8 tenants.
The Project-Based Assistance Program links to specific properties. Once accepted into the program, families can rent a unit in these homes.
The Voucher-Based Assistance Program allows the tenant to rent a home of their choice at the landlord's discretion. Tenant screening is still important for Section 8 tenants, but you can't discriminate against them based on their income.
People may qualify for Section 8 housing assistance, provided they:
- Are US citizens or have eligible immigration status
- Have no history of eviction due to drug-related crime
- Meet the HUD's definition of a family
- Earn less than 50% of the average income for the area
The HUD allocates Housing Choice Vouchers annually based on fair market rental rates. These usually end up being about 40% of the median rent in an area after they have taken inflation and forecasts into account.
Pros and Cons of Accepting Section Eight Tenants
Becoming a Section 8 landlord isn't always a conscious choice for California landlords. That's due to the laws against discriminating against tenants based on income, as long as they meet your other criteria.
You can advertise that you accept Section 8 tenants to boost your chances of getting the government to pay some of your rent, though.
If you decide to pursue this option, you will enjoy some benefits aside from helping to alleviate California's housing crisis. These include:
- High demand and low vacancy rates
- Generous annual rent increases
- Lease renewals and long tenancies
Section 8 tenants are also motivated to take good care of the property, or they risk losing their vouchers.
Despite these benefits, some landlords find the bureaucratic red tape involved in Section 8 housing offputting. You may have to wait a couple of months for your first payments due to these delays.
Other drawbacks include accepting lower rentals than the market rates, difficulty collecting security deposits, and annual property inspections for PHA housing.
The Best Option for Your California Investment Property
If you're weary of the complications involved in marketing your rental home, managing tenants, and unpredictable rental payments, Section 8 rentals could work for you.
When you hire a full-service property management company, you needn't worry about the technicalities involved in becoming a Section 8 landlord. PMI Contra Costa has years of experience managing all types of rental properties.
We'll help you make the best choices for your investment properties in Walnut Creek, CA, Section 8, or otherwise. Get in touch to discuss the best options for you.
