Crazy About the Section 8 Program

I’m often asked about the pros and cons of being a Section 8 Landlord.The truth is… The Section 8 program offers real estate investors guarantees and safeguards unmatched by the private sector rental market. With my Section 8 tenants, I’m more confident I’ll get paid, there is little chance I’ll have to worry about an eviction, the lease is likely to be renewed, and I always get my checks at the beginning of each month! The associated challenges that come from dealing with federal agencies as well as financially challenged tenants are easily overcome. The concerns often associated with the Section 8 program are often the result of inexperience, misconceptions, or from lack of credible information. Tenants know that if the rent is not paid, their voucher will be rescinded and they will be evicted.

Thousands of successful landlords have made fortunes in real estate by participating in the Section 8 (Housing Choice Voucher) program. It is my experience that there is no better way to fill your vacant rental units than with Section 8 participants.

http://www.GOsection8.com provides an advanced database system that allows the landlord to list available properties and locate potential Section 8 tenants. If you want to participate in the Section 8 program list your property with GO8 to get the ball rolling.

How does the Section 8 Program work? The Public Housing Authority (PHA) pays a large portion of the rent on behalf of the tenant, typically 2/3rds, at the beginning of each month (usually sent to the landlord/property manager via first class mail, although many states/counties have recently instituted a direct deposit program) and the Section 8 tenant is responsible for the remainder. Please read the “What is Section 8″ blog for more…

Walk-through

Walk-throughs. Good for the tenant.  Good for the landlord.  Walk-throughs benefit the tenant and the landlord by holding each to the same standard.  I learned this lesson the hard way – as a renter in college.  For some reason landlords think all college students are subsidized by parents with deep pockets who don’t think twice about their security deposit once the quarter or semester is over.  I wasn’t one of those students (or those parents for that matter!) and had to count every nickel, however no one ever suggested that I take pictures of what the apartment looked like before I moved into it.  Who could have anticipated that I would forfeit a sizable chunk of my security deposit to a shady college town landlord? OK, so I learned that lesson and it took only once!  Now as a landlord, I do a walk-through with the tenant before s/he takes occupancy and I record the walk-through (date stamped and with audio).  I add the address, sign and date it, have the tenant do the same and store it with my copy of the signed lease and punch list. I’ll offer the tenant a copy of the DVD, but they usually decline.  Remember, this doesn’t take the place of a pre-occupancy walk-through punch list.  No matter how well intentioned and diligent a landlord is about their properties; a new tenant can be remarkably eagle-eyed.

I repeat the process with the tenant when the lease is terminated and they’re ready for the final walk-through. (I find myself repeating the landlord mantra: “This isn’t personal, it’s business. This isn’t personal, it’s business. This isn’t personal, it’s business.”) Again, I’ll offer them a copy of the DVD.

Note: In the pre-digital world, I would use a camera, have a contact sheet printed and the tenant and I would sign off on that.  I would sleeve and store the negs and contact sheet with the lease.  Different technology, same goal.  Protect your assets.

Due diligence and Megan’s Law

Due diligence and Megan’s Law. Is the landlord or property manager responsible for determining whether or not the applicant is registered as a convicted sex offender? Can the landlord deny tenancy to a convicted sex offender? Can a landlord evict a resident that was convicted as a sex offender? Can a landlord reveal to other residents the location of a convicted sex offender?

If the rental application asks about convictions and the applicant has misrepresented him/herself, the contract is voided and the landlord has the right to evict without penalty provided this statement has been addressed and included in the rental application as part of management’s policy.

Some states, such as California, have passed legislation that all residential leases and rental agreements must contain a paragraph in 8-point type, which informs the resident that s/he can access sex offender information. It might be a good idea to include where the information can be found such as http://www.klaaskids.org/pg-legmeg.htm or http://www.rentlaw.com/meganslaw.htm.

As a business owner, landlord, community member and parent, I feel that it’s as much my responsibility to screen applicants for criminal behavior as for credit scores.

Every landlord is in search of the perfect tenant.

Every landlord is in search of the perfect tenant and, to that end, we diligently check credit scores, driver’s licenses, employer and landlord references, income tax returns, and when all the results are in - often the proverbial ‘gut check’ is the deciding factor. Your unit may have been sitting empty for a couple of months and the tenant pool has dried up, so you’re thinking anybody is better than nobody…STOP! Lowered expectations have never enhanced anyone’s bank account – and with tenants the expenses rise exponentially! The few months rent will never offset the expense incurred for eviction proceedings, repairs and downtime for your damaged unit, and the cost of processing another tenant. So, keep checking your gut…and make sure that you have a comprehensive application.

Who are you renting to?

Whether convicted felons, cigarette smoke, cats, dogs, vegans, meateaters, lotsa kids, no kids, extended families, car projects, or the heavily pierced & tattooed– we all have that one deal-breaker.

As long as it’s not directed at a specific ‘class of people’ and you have included the appropriate clause in the lease agreement. One point to remember, while you cannot require that the tenant be a citizen, you can require legal residency.

Late fees?

Late fees? Actually, this is one area that I don’t have much trouble with, anymore. I make sure that everything is stated in the lease, the tenant understands the consequences at signing, and I’ve found that sending a bill to my tenants 10 days before rent is due (with a stamped, addressed envelope) is a real motivator. Plus I can use the invoice as a “tenant training tool”…adding reminders such as, thermostat settings, check the batteries in the smoke detectors, notify me about any rodent or insect ‘sightings’, maintenance schedules, etc. I didn’t get this smart overnight, however, but I realized early in my landlord career that one-time late fees are easier to collect than the day-by-day late fees. Plus, you really need to make sure that you’re compliant with the state requirements (the maximum late fees vary state by state – http://ohiolandlordtenant.com/all50.html) . Currently, this is what’s included in my lease agreements:

Rent is due by the 1^st of each month.Rent is considered late by midnight of the 3^rd. Late fee is due the 4^th. Pay or Quit on the 5^th.

No surprises and everyone knows what is expected, when it’s due, and what the consequences are.

Lights, Scurry, Action.

Lights, Scurry, Action. Ewwwwwwww. Roaches. Everywhere. YUCK! I can’t believe that people can actually live with these things. “Have you noticed any roaches? Ahhh, no I haven’t seen any…” they reply, as their kids are wheezing and scrambling for their inhalers.

German cockroaches need humans and a damp environment to survive. The adult female cockroach can live for a month without food - provided there is water available. Aside from stinking (literally), eating virtually anything, relentlessly pooping and shedding body parts in and on everything they touch, German cockroaches are a source of nasty allergens (again, the body parts and droppings) which play a distinct role in provoking respiratory attacks in children and adults.

No room at the inn? If you see three or four cockroaches in the open, you may have a huge infestation. According to the Bug Be Gone Wizard, “if you can see ‘em during daylight, it’s cause the damp, dark places are FULL!”

Now that you’ve identified the enemy, get smart about what you’re up against (http://www.ext.vt.edu/pubs/entomology/444-289/444-289.html) and how best to eradicate these vile bugs. In addition, you can educate your tenants - discouraging roach enticing, asthma-inducing behavior by including some information with the lease, posting it in the common areas, or including it in their statement. A landlord can’t manage the bug and rodent problem effectively if the tenants don’t know how to help (http://www.ehw.org/Asthma/ASTH_RoachCntlRecs.htm).