Have you ever wondered how Section 8 landlords successfully join the housing program? If yes, then this article is for you!
Becoming a Section 8 landlord requires you to go through an application process with your local Public Housing Authority (PHA). The process has many routine steps, and the most important one is where the PHA assesses how reasonable your rental price is. Read on to learn more about the reasonable rent calculation and Section 8 housing applications.
HUD's Fair Market Rent Number
An area's local PHA administers the Section 8 program in their jurisdiction. However, the Section 8 rent calculation starts with the Department of Housing and Urban Development (HUD).
The department does an annual survey of around 2,500 locations each year. In that survey, they look at the prices for all standard rentals (everything excluding luxury and new units).
The fair market rent value they publish at the end of this process is the 40th percentile rent (50th percentile in some neighborhoods). This is the price at which 40% of the locality's rentals are cheaper, and 60% are more expensive.
How Your PHA Uses the Fair Market Rent Value
Next, the local PHA calculates a value they'd be willing to contribute towards the Section 8 vouchers they approve. This calculation uses the fair market rent as its foundation. The payment standard increases with the number of bedrooms in a unit, as well as if other factors increase the unit's value.
The PHA's rent reasonability criteria are more flexible than the strict fair market figure. Their approved payment standard usually falls within 90 and 110% of the area's fair market rent value. This means your rent should be considered reasonable if it is within that bracket.
How This Benefits Section 8 Landlords
Landlords whose properties can feasibly be rented near the fair market price can benefit significantly from the Section 8 program. On the tenant side, the Section 8 evaluation process includes a standardized background check. The odds of getting decent tenants are pretty high.
Section 8 requires that tenants pay a portion of their rent, but the PHA vouchers cover a substantial amount. This way, you're guaranteed most of your monthly rental income on time, even if the tenant is late. Most Section 8 tenants are also pedantic about paying on time to not jeopardize their spot in the system.
Most tenants in the Boulder, CO, housing system stick with the program for several years. They tend not to move around, so you don't face vacancy costs for that time. You may also get institutional help evicting bad tenants if it's necessary.
Using Your Property to its Full Potential
There are many ways in which affordable housing in Boulder, CO, can be a win-win for the landlord and their tenant. However, it can only be that way if the rent is reasonable.
The reasonable rent calculation on which Section 8 stands is based on an area's fair market rent value. The local PHA will pay 90 to 110% of that value in the form of Section 8 vouchers to landlords in the system. This can have great benefits if your property fits that price.
Renting to Section 8 tenants is a strategic decision you should weigh carefully. PMI Flatirons Group brings nationwide expertise packaged as a local property management service. Contact us today for winning property management strategies.
