How to find professional Section 8 property management

Section 8 property management works a little bit differently when a home is occupied by a tenant with a housing choice voucher. 

In addition to normal management tasks, a Section 8 property manager must comply with the additional rules set by HUD, such as keeping the home in a decent, safe, and sanitary condition, and keeping the rent at the fair market rate determined by HUD. 

While there is some extra time and skills involved in managing a Section 8 property, an investor may find owning a Section 8 property to be well worth the effort.

Key takeaways

• Section 8 is part of the Housing Choice Voucher Program from the U.S. Department of Housing and Urban Development (HUD).
• Landlords participating in Section 8 receive a housing subsidy directly from a local public housing agency (PHA) that generally pays for a large percentage of a tenant’s monthly rent.
• In order to be approved and stay in the Section 8 program, a property must pass an initial inspection, and additional inspections every 1-2 years.
• A good Section 8 property management company can assist with issues such as complying with HUD inspection guidelines, screening tenants, performing periodic routine inspections, and conducting additional screening of prospective tenants.

What is Section 8 housing?

The Housing Choice Voucher Program Section 8 from HUD is designed to assist low-income families, the elderly, and disabled to afford decent, safe, and sanitary housing in the private market.

Tenants that qualify for Section 8 are free to choose among single-family homes, townhouses, and apartments approved for the Section 8 program. In order to be approved for Section 8, a family’s income generally can not exceed 50% of the median income for the city where the property is located.

Landlords who participate in the program receive a housing subsidy directly from a local public housing agency (PHA) that generally covers a large portion of the tenant’s monthly rent. Any unsubsidized rent is paid directly to a landlord by a tenant. HUD determines the maximum fair market that a tenant can be charged each month, and also determines how much the rent can be increased each year.

For a rental property to be approved for Section 8, a landlord must apply to the program and be approved, complete an initial property inspection conducted by the local PHA, and allow the PHA to perform additional inspections every 1-2 years.

Why investors hire a property manager to handle Section 8 tenants

Real estate investors generally hire a property manager to handle Section 8 tenants and the property to help ensure the home is being taken care of, and that the Housing Quality Standards (HQS) set by HUD are being consistently met.

Here are some of the key differences between renting to a Section 8 tenant versus a tenant who does not receive government assistance, and how a Section 8 property manager can help. 

In order to be approved – and stay in – the Section 8 program, a home must pass periodic inspections conducted by a local PHA to ensure the property is in a decent, safe, and sanitary condition. Homes are inspected before a tenant moves in, and every 1-2 years thereafter, depending on the public housing agency. 

If a home doesn’t pass the initial inspection, a landlord may lose a tenant to another Section 8 landlord while repairs required by the PHA are being made. Any serious health or safety issues discovered during an annual PHA inspection must be immediately taken care of, and the property inspected the next day. 

A good Section 8 property manager can help minimize any issues found by proactively inspecting the property every 3-6 months. By staying on top of property wear and tear, along with any damage caused by the tenant, a manager can help ensure that a property will receive a passing grade by the PHA.

Delay in receiving the 1st rent payment from a PHA

When a Section 8 tenant first moves in, it may take 1-2 months or more before the rent check from the PHA is received. During that time there are still bills to be paid and repairs to be made. 

A Section 8 property manager can help a landlord plan ahead for the first couple of months when there is no rental income coming in by ensuring that there is enough cash held in the operating account to pay for the property operating expenses. 

If a property manager has an in-house maintenance team, the manager may be able to delay being reimbursed for any repairs or maintenance work until after the consistent rent payments are received.

While the housing choice voucher program helps to pay for a tenant’s rent, in most states the Section 8 program does not pay for a tenant’s security deposit. 

Even though a Section 8 approved tenant goes through initial screening by HUD and a PHA, a good Section 8 property manager will conduct additional tenant screening to ensure that an applicant has enough income to pay for any required security deposit. 

Tenant security deposits are regulated by local and state landlord-tenant laws and not by HUD. The maximum security deposit a landlord may collect generally ranges between 1-2 months of rent. The legal resource website Nolo.com publishes a list of security deposit limits for each state.

The HUD Fair Market Rent Documentation System calculates the fair market rent for each state, county, and metropolitan statistical area. 

The annual fair market rent determined by HUD is used to set the maximum rent amount that a landlord can charge a Section 8 tenant, along with how much a tenant’s rent can be increased each year. A Section 8 property manager can ensure that a tenant is charged the maximum rent allowed by HUD, and that any annual rental increases are applied. 

By knowing how much rent a Section 8 landlord can charge, a good manager can also help a landlord to understand whether making renovations or upgrades will generate a sufficient return on investment. 

A landlord generally makes improvements to increase property value and generate more rental income. But when HUD limits the amount of rent a landlord can collect, some improvements may not make financial sense.

A family receiving a housing choice voucher from HUD is expected to comply with the lease and Section 8 program requirements, pay its share of the rent on time, and maintain the home in good condition. If a Section 8 tenant violates the rules or damages the property, the tenant runs the risk of losing their Section 8 eligibility. 

However, as with all tenants, there is always the risk that a tenant will cause damage to a property beyond normal wear and tear. A Section 8 property manager can conduct routine inspections of the interior and exterior of the home, along with periodic drive-by inspections. 

By staying on top of property damage, a manager can quickly identify any property misuse or damage caused by the tenant. A Section 8 property manager can also remind a tenant of the tenant’s responsibilities under the Section 8 program and the potential consequences of breaking the rules.

How to find a Section 8 property manager

Not every mainstream property management company is capable of handling Section 8 properties. Specialized knowledge and extra effort is involved, and a property manager must be aware of how HUD Section 8 works in order to generate the most potential profit for an investor.

Three good ways to find a Section 8 property manager are by visiting Mynd, by performing an online search for the city a Section 8 property is located in, and by asking fellow Section 8 investors for a referral.

Mynd

Mynd is a professional property management company with a tech-enabled platform and nationwide presence.

The company operates and manages properties (including Section 8) in 30+ markets across the U.S., making it easier to manage geographically diverse portfolios.

Mynd offers an all-in-one service that includes leasing, maintenance, financial reporting, and resident relations. The company manages everything through an intuitive online portal for seamless access.

With Mynd, you can focus on strategic growth without the daily hassles of property management.

Go here to learn more about Mynd and see if they offer management in your city.

Online search for Section 8 property manager

Another way to find a Section 8 property manager is by searching online by using the search term “Property management companies that accept Section 8 + [city or state].” 

However, a management company may not have Section 8 experience just because they appear in the search results. When interviewing a prospective Section 8 manager over the phone, an investor may wish to ask questions such as:

• How many Section 8 properties does the company currently manage?
• Is the property manager aware of the required paperwork and procedures required by Section 8?
• How often are Section 8 mandatory inspections performed, and what happens if a property does not pass inspection?
• What are the rental rate and annual increase limitations set by HUD for Section 8 property?
• Does the property manager conduct additional screening for tenants that have been prescreened by HUD and the local PHA?

Ask for a Section 8 property manager referral

Word of mouth can be the best form of advertising, and that’s equally true when asking for a referral. When fellow real estate investors have a good experience with a company, they’re usually more than happy to spread the word. 

Some good sources for finding a referral for a Section 8 property manager include local real estate agents, mortgage brokers and escrow offices, members of a local real estate investors club, and even asking a Section 8 tenant for the name of the company that takes care of the property they’re renting.