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Section 8 is a government sponsored assistance program for families and individuals in need. Through the program they are given a voucher that will cover some or all of their rent payment. Landlords and investors can benefit from the program by having a portion or all of the rent fee guaranteed. This provides consistency and cash flow regardless of market conditions or economic factors.
As a part of the Section 8 housing program residents and landlords are required to conduct an annual inspection of the property. This inspection includes a checklist of items that ensures that property is up to standard for the renter and the landlord. This third party inspection is another value-add for landlords.
Along with this, we expect to see a longer tenancy with Section 8 residents. Oftentimes these residents are very motivated to stay in the home and have jobs or children in school in the area. So what happens when one of your Section 8 residents decides to move? There is special protocol that must be followed as a landlord renting to Section 8 residents.
The first thing to do when a Section 8 resident provides their notice is to schedule an inspection of the property. During this inspection the landlord and or the property management team need to walk through the house and inspect for damage beyond normal wear and tear. Experienced landlords will have a pretty good idea of what normal wear and tear looks like, but in general we’re looking at the condition of the walls, flooring, and fixtures as compared to the start of the lease.
Evernest recently conducted one of these inspections at one of our rental properties in Birmingham, Alabama and found several issues that are substantially beyond normal wear and tear. For example, there were new holes in the drywall and the carpeting was noticeably dirty and stained. We also found the resident had replaced an interior door, but had not added a door knob, and several light fixtures were missing.
Once the landlord or property manager has identified any issues beyond the scope of normal wear and tear a plan for resolving the issues must be established with the resident. In the meantime, the request to move is not approved until the issues are resolved.
Option One: Resident Makes Sufficient Repairs
The first option is for the resident to resolve the issues and schedule a follow up inspection. They can hire their own contractors or conduct their own repairs if they feel this is a better cost option, however, ultimately the work needs to be up to the landlords standards to be deemed acceptable.
Option Two: Bill Resident for Repairs
The landlord or the property manager can hire contractors to facilitate the repairs and bill the resident for the cost. For property management companies with internal maintenance teams, this is typically the best option, but it is extremely important to provide cost estimates to the resident in advance. Section 8 residents are already facing some degree of financial difficulty, adding a large repair bill could be a shock or simply unattainable for some residents. Communicate and work with your resident to find the best solution for both parties.
In addition to communicating with your resident, a copy of the itemized repair estimate must be sent to Section 8 as well, so they can see why you are denying the resident’s request to vacate the property. It is possible to use funds from the resident’s security deposit to help cover the cost of repairs. Once the cost of the repairs has been covered or all the repairs have been completed the landlord can sign off on the move documents for Section 8.
Section 8 Investors Guide – If you’re interested in learning more about the benefits of investing in Section 8 housing, check out our complete guide here.
Section 8 in Birmingham – Learn more about Section 8 investment opportunities in Birmingham, Alabama on the Birmingham Real Estate Investors podcast. In this episode, Spencer and Hunter welcome Amy Bromberg, our Birmingham Director of Operations, to discuss Section 8 in Birmingham. They discuss the advantages and disadvantages of Section 8, including the intricate process from the initial application to move in, and the renewal process to ensure a long-lasting resident relationship.
Section 8 in Atlanta – Learn more about Section 8 in Atlanta on this episode of the Atlanta Real Estate Investors Podcast. In this episode we discuss the process for accepting a Section 8 application in Atlanta.
Matthew is the CEO of Evernest. He is a student of the book Good to Great and is passionate about building the best property management company on the planet (and maybe even the universe if Elon Musk will hurry up). You can usually find Matthew at the baseball field with his son, at a dance recital with his daughter, or at his favorite restaurant with his wife, when he’s not in the office. And if you can’t find him in any of those places, it probably means he’s traveling.
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