We’re about to get our first experience with Section 8. One of the SFHs we’re taking over has a resident who is using Section 8. Section 8 pays $421/mo. The resident pays $19/mo. There is currently no deposit held on this property (the other three have deposits which will be credited to us at closing). Is it normal for Section 8 tenants to not have deposits? What happens if there is damage when the Section 8 tenant leaves? Does Section 8 do anything about this or do they just kick the tenant out of the program and I have to eat the cost of the damage?
We also have one more resident who is currently paying the full rent amount, but has applied for Section 8. I’m planning on doing all m2m leases for these houses. Would I just do a new lease if they get approved for Section 8 to separately list the tenant’s amount and Section 8’s amount (or could I just write an amendment to the my regular m2m lease to reflect the changes)?
Everything else looks like it’s coming together nicely for the deal. We’re excited to be expanding.
Just I have two section 8 properties in Florida and we ALWAYS get deposits. I’m not sure what the specific requirements are in your area; but I would guess that the previous landlord did not get one. If there is damage when the tenant leaves, it is on you to fix it (hence the deposit). Your recourse is to call the Section 8 case manager and file a formal complaint against the tenant. Enough complaints and they are kicked off the program.
In my area, Section 8 does not allow M2M leases. They require atleast 12 month min. Section 8 will require a new lease that will be comforming to their program guides in your area. I would call the local office and ask. Additionally they hold Section 8 landlord classes once a month. Hope this helps.
When you’re dealing with low income tenants (section8). I would NOT do a lease. If the tenant doesn’t pay, you can evict but chances are that you’ll never recover any money. On the other hand, if you neglect your duties as a landlord ( whether its true or not), you’ll have to abide by the terms of the lease or face the wrath of Section 8!!. Basically, YOU have to follow the rules, but the tenant doesn’t. You’ll have to fix things right away. But the tenant can drag their feet and stall until you evict them. Just be sure you’re aware of what you’re getting into. Know the rules and do the best you can. Section 8 can be good resource if know what to expect and SCREEN THE HELL OUT OF EVERYONE!! GOOD LUCK.
Justin,
The landlord should ALWAYS get a security deposit and the first month’s rent, IN CASH AND IN FULL, before signing a lease with the tenant and before giving the tenant the keys. So, the fact that the landlord didn’t get a deposit says a lot about the previous landlord!
If the tenant damages the rental when he leaves, you will get to fix the damage. If you get a court judgment against the tenant for the damage and/or unpaid rent, then Section 8 will require them to pay or lose their voucher. Without the court judgment, Section 8 won’t do anything about the damage, including kicking the tenant off the program.
If your other tenant gets a Section 8 voucher, then you will be required to start a new lease with the tenant, including the HAP Contract addendum (which is provided by Section 8). They normally require a 1 year lease, but I have done month-to-month leases with a few Section 8 tenants, with Section 8’s approval. You do NOT list the Section 8 portion separately from the tenant portion of the rent on your lease. Just list the total rent amount as usual. The tenant’s portion of the rent can change during the term of the lease, so separating the amounts in the lease won’t work.
Good Luck,
Mike
Thanks everybody! When we started all of this, I expected there were plenty of people out there who just owned a couple places and rented them out under their personal name. I figured most people didn’t treat it like a business. What I didn’t expect to find was that so far we’ve yet to take over a place where the prior owner had any written leases.
We’re going to call Section 8 Monday and hopefully get everything worked out. Closing is on Wed. Our Realtor said the Section 8 office people there are good to work with and things should go smoothly. I have no problem doing a one year lease so Section 8 will approve the tenant. I was just under the impression all these people were m2m and not held under a term. Sounds like we’ll have to collect a deposit from that one tenant. Thanks for the lease details too!