Getting the Most from the Section 8 Housing Program

I love a real estate story with a happy ending, and the one I just went through did end well, but only after providing significant, and seemingly insurmountable, twists and turns. Let me explain.

The backstory: Section 8 housing is a Federally-controlled program started in 1937 that authorizes rental housing payments to private landlords on behalf of low-income households. The goal is to ensure people earning low wages can still find ‘decent housing and a suitable living environment’ outside of public housing units.

Applicants who meet income requirements apply for and eventually receive a ‘voucher’. This voucher (worth a particular monthly dollar amount) allows them to find a suitable rental and the local housing authority sends payments directly to the landlord. These voucher payments cover all, or a significant portion, of the rent. Any shortfall is paid by the renter directly.

The Section 8 program not only helps renters, it also provides landlords a steady, guaranteed income because the tenant (Section 8) always pays their portion on time and never breaks their lease. It’s no wonder why many investor/owners actually seek out Section 8 tenants. However, there are other facets of the Section 8 program that are anything but simple.

In my very real story, I represent a landlord we will call (Landlord) Lisa. She owns a well-kept one-bedroom apartment in a condo complex near The Falls and she has been lucky enough to have kept the same tenant for five years. However, this year they are leaving and she (and I) needed to find a replacement with little to no gap in occupancy.

Over a short period of time, I attracted a number of potential renters, including one that identified herself as being in the Section 8 program with an active voucher. We’ll call her (Tenant) Tana. Tana is a retiree who wants to live closer to her daughter, but needs financial assistance to do so.

When I explained the Section 8 program to Lisa, and that Tana was in it, Lisa wanted nothing more than to help Tana be near her daughter and have her as a tenant. This is where the twists and turns start.

Twist #1. The landlord and the property must be vetted and approved in order for Section 8 to pay a landlord. In short, they will only accept and pay landlords who have no criminal background and who pay their taxes on time. Also, the property must be inspected and deemed safe. So, Lisa, being a beautiful and kind human being wanting to help Tana, decided to invest her time to become a Section 8 approved landlord.

So far, so good, except Lisa had to go on faith that she and her property would be approved AFTER having already signed a lease with Tana. Further, Tana had to place a deposit on the lease and spend additional money to apply to the association, all BEFORE the landlord was Section 8 approved. This meant that Lisa could stand to lose her next tenant and have her place become vacant (non-income producing) and Tana stood to lose a significant sum of money. Not cool Section 8!

Twist #2. Section 8’s rules do not jive with standard Florida lease language, where real estate agents hold the first month’s rent in deposit. Conversely, Section 8 states the tenant is only required to pay the full security deposit on a lease and that Section 8 pays only towards rent, including the first month’s rent. This confuses everyone and creates a potential legal issue for the real estate brokerage who is not holding the correct funds in escrow.

Twist #3. Despite having a fair-market price on the Lease, Tana’s voucher was not sufficient to pay all the rent. And, even though Tana’s paperwork said “the Tenant can make up the difference in price between rented amount and voucher value”, Section 8 ended up disallowing about $80 of that price difference due to “some regulations.” Further, Tana was told that if she did pay that $80 difference she would be permanently dropped from Section 8 eligibility! Tana was devastated and thought she had not only lost a place to live, but also all her escrowed money. And that is what would have happened if Lisa had not compassionately LOWERED her rent to keep Tana in compliance!

Twist #4. Section 8 informed everyone that they would only inspect and approve the property when it was vacant! This was not possible because Lisa’s current tenant was still there. Again, it appeared Section 8 rules and regulations had destroyed the good work of both landlord and tenant.

All the while, Lisa, Tana and I tried to consult, plead and discuss these problems with all the Section 8 resources we could find, without success. At this point, Tana was in tears and Lisa was upset that her good deed might result in a loss of income. It was then I decided to see if an email to County Mayor Daniella Levine Cava could help us get through the red tape.

Within 24 hours of receipt, the Mayor put me in touch with two key people at Miami-Dade’s Section 8 program and all the friction seemed to melt away. They said, “Sure, there was a way to inspect without a vacancy,” and “Yes, there are rules around voucher maximums, but they can be individually reviewed.”

 As you read this, Tana is moved in and Lisa has started to receive her Section 8 rental income, having helped someone less fortunate and well-deserving. I am so happy that our efforts, along with the Mayor’s help, snatched victory from the jaws of systematic defeat. And I am happy as well, having helped bend the Section 8 policies to create a success.

For more information about Section 8, please go to mdvoucher.com