Hi, This is my first post and I really enjoy the information given here. I am not new to rehabbing and investing, but I still consider myself a novice. My questiopn is in regards to section 8. Can someone explain utility allowances. I know what the max$ amount rent they will pay and I know how much I need to make a decent profit. How do I determine what the rent will be and and how do I figure in these allowances.
Thanks
Go to your local Section 8 office and ask for a copy of the worksheet and utility allowances. They’ll be happy to give this to you and then you can run the numbers yourself.
Good Luck,
Mike
I have been dealing with Section-8 for a few years and Utility allowances only apply if you are providing utilities for the tenant. Other than that, it has no bearing on your rent payments. Please tell me you are not including utilities in your rents?
Ismith2020,
That is not true. The maximum authorized rent (may not be the right term) includes the utilities. If the landlord doesn’t pay the utilities, the housing authority deducts the utilities (from the utility worksheet) from that maximum number to determine the maximum rent they will pay the landlord. That’s why the rent they will pay the landlord differs with different heating types. Here in Ohio, the maximum rent the landlord can receive can be $100 different depending on whether the heat is gas or electric.
I had one house that Section 8 would only pay about $450 with gas heat or $562 with electric heat. I put in electric baseboard heat and took the $562.
Mike
Thanks propertymanager,
I am in Ohio also and I got the spec sheets from Section 8. My section 8 prospect already has a voucher and the the max Section 8 will pay is $826. (BTW, they are a good friend of the family, so I’m not worried ) I will not be paying for any utilities. So are you saying my rent ceiling will be $826 minus the allowances? How can I receive $800/mo. Thats where I want to be.
Unfortunately, you don’t get to choose. Section 8 will plug the allowed number of bedrooms and the utilities worksheet into their formula and out will come what they are willing to pay you. You then get to take it or leave it. If you get the worksheet from them, it has step by step directions for determining the rent they will pay.
I don’t normally do this worksheet myself, because I keep trying to get non-section 8 tenants while I’m waiting for section 8 to do their stuff and while I’m waiting for the inspection. If I find a good regular tenant, I’ll take them and just cancel the section 8 tenant.
Mike
Property manager is right. I did not show the difference between electric baseboard heat and central heat. All my units have baseboard heat so the rule is different. I charge $465 per unit and the tenants are responsible for thier own electricity…Good post