With the major changes throughout the landscape of Real Estate, many landlords have been bred into existence as the rents continue to skyrocket throughout Chicago. As a matter of fact the home ownership rate is at one of it’s lowest percentages in history and many saavy investors have made their way into the real estate space as the numbers make more and more sense. Learning how to become a section 8 landlord is one options you may want to consider. My goal of this article is to help you decide if this is the route for you or not.
One of the first things you will encounter in learning how to become a section 8 landlord is there are many “rules” you need to follow that are often misunderstood. Learning the ins and out of the rules with learning how to become a Section 8 landlord is where you should start. Most people are either going to be turned on or off by this process right off the bat.
It’s extremely important to note that as of August 2014, those utilizing the benefits of the Housing Authorities in Illinois are now protected under the Fair Housing and Equal Housing Opportunity Acts, and it is illegal to discriminate against anyone based off of the source of their income. When potential tenants call and ask “Do you accept Section 8?” or “Are housing vouchers allowed?”, they are likely unaware of this new reform in Illinois. Many participants within the Housing Authority programs are new to it or uninformed about how their voucher works, so it is important for Landlords to know the ins and outs and become familiar with each of the housing authorities of which they will work with.
The Two Players In The Chicago Area
Locally, there are two Housing Authorities you could possibly deal with: The Chicago Housing Authority (CHA) which covers housing within the city limits, and the Housing Authority of Cook County (HACC) which covers the remainder of housing in Cook County. Participants must “port out” if they wish to move from one program to another.
Both programs work with participants by reviewing income and expense levels, and then determining how much assistance they qualify for. A tenant can be responsible for up to 60% of their rental expenses, depending on utility costs and a few other factors.
One things to note as you learn how to become a section 8 landlord is that it’s illegal for you to accept any rental money outside of the Housing Authority Program (HAP) contract! Don’t play around with this trying to squeeze extra income because it’s just not worth it. It will be specifically be outlined what your section 8 tenant can pay so just abide by it.
After the participant’s ratios are calculated, they are then issued their voucher and may start looking for a rental property. CHA’s voucher values are determined by bedroom count, and the HACC’s voucher values are determined by zip code. After you learn how to become a section 8 landlord, I strongly advise knowing what the potential rental income is for the area you are looking to invest and then working the numbers backward.
DO NOT BUY THE PROPERTY FIRST WITHOUT KNOWING WHAT YOUR POTENTIAL RENTAL INCOME IS GOING TO BE
These values change annually according to inflation and other changes within the rental market. In order to become a Section 8 landlord (or maintain the status) your rental amounts must match these values.
Taking In A Section 8 Tenant Application
Once a Housing Authority participant has found a place to their liking, they are subject to regular screening and application processes. Credit checks, background checks, or other methods utilized by Landlords are still applicable. While this is underway, the Landlord must in turn fill out the application and information packet from the Housing Authority to verify property ownership and set up the required inspection.
Prior to be granted approval there will be a mandatory inspection of the property conducted. All properties must meet minimum CHA/HACC requirements to be suitable for tenants and qualify in order to receive program funds. These inspections are free, simple, and performed by an employee of the respective Housing Authority. Once all necessary agreements, documentation, and inspections are completed the participant may sign the lease and make arrangements for the move in procedures or security deposit.
Getting Your Money
The CHA and the HACC make payments via KeyCard systems or direct deposit on the 1st of every month. Landlords must opt out of the KeyCard system if they wish to have their funds deposited directly. They may also withhold or withdraw funds if a Landlord has breached the Housing Authority Program (HAP) contract. If this should occur, the tenant must still continue to make their portion of the payments until the issue is resolved. Should a tenant decide to end their tenancy and move out, regular provisions and procedures must be adhered to as in a typical lease.
What To Do Next
Speaking with Real Estate professionals and property managers well versed in CHA/HACC procedures and regulations can be a great idea and can unlock a wealth of information on how to become a Section 8 landlord. If you are a Landlord and have any questions about housing subsidies or other programs, please do not hesitate to reach out! Navigating new Real Estate landscapes can be easier and more profitable when you know the inner workings, and have someone to help just in case.
I have been working section 8 rental properties for a long time and would be glad to answer any additional questions you may have in learning how to become a section 8 landlord.
I don’t bit give me a ring today!