This guide offers essential insights for landlords seeking to maximize their potential earnings through the Section 8 housing program. It emphasizes the importance of accurately calculating your maximum rental income. By following the steps outlined here, you’ll be well-equipped to engage in negotiations with the Housing Authority and secure a fair arrangement.
Understanding Payment Standards
To get started with Section 8 housing, your first step is to acquire the Payment Standard from your local Housing Authority. This crucial information, available on their website, is determined either by fair market rent or specified by zip code and bedroom size.
For example, if the Housing Authority follows the fair market rent approach, you’ll see the Payment Standards listed by bedroom size, each indicating the maximum they are willing to pay for units of that size. When Payment Standards are based on small area fair market rent, you’ll find them specified by zip code, indicating the maximum rent for units of varying sizes in those areas.
Obtaining the Utility Allowance Form
Obtaining the Utility Allowance Form is the next important step in the Section 8 housing process. While this form may not be readily accessible on Housing Authority websites, you can request it through phone or email. Alternatively, many voucher holders, i.e., Section 8 tenants, possess this form. You typically receive it when you engage in the tenant screening process.
Understanding Tenant’s Monthly Income
The third piece of information you’ll need is your tenant’s monthly income. During the application process, you’ll ask potential tenants about their monthly income. It’s essential to ensure their income is accurate because it plays a significant role in determining your potential rental income.
How It Works
Now, let’s get into the details of how to calculate your maximum rental income:
1. Subtract Utility Costs: Deduct the utility allowance amount from the Payment Standard. This subtraction will give you the maximum rent the Housing Authority is willing to pay.
2. Tenant income plays a significant role in the Section 8 process. Regulations permit tenants to allocate up to 40% of their income to rent and utilities combined. If this 40% exceeds the amount calculated earlier, the surplus can be added to the rent. This could potentially raise your rental income.
Here’s an example to illustrate this:
Payment Standard: $3,000
Utility Allowance: $500
Tenant’s Monthly Income: $2,000
In this case, 40% of the tenant’s income is $800, which is more than the utility cost of $500. So, you can add the extra $300 to the rent.
Maximum Rent You Can Receive: $3,000 – $500 + $300 = $2,800
Your tenant pays $500 for utilities, $2,800 for rent, and the Housing Authority covers the rest.
What If Tenant’s Income Is Less Than Utility Costs?
In certain situations, a tenant’s income may fall below the utility costs. In such cases, the tenant won’t be responsible for rent, and the Housing Authority will cover the entire rent payment. They may also offer the tenant a utility credit to help with utility expenses.
Negotiating with the Housing Authority
Sometimes, the Housing Authority might not be willing to pay the maximum allowable amount, citing future rental increases. It’s crucial to be well-informed and willing to negotiate. You can present alternative rental amounts based on your calculations, which may help you secure a better deal.
Understanding how to calculate your maximum rental income under the Section 8 housing program can be a valuable tool for landlords. While the Housing Authority may not always agree to the highest possible rent, your knowledge will give you the power to negotiate and potentially increase your rental income. With this information, you can confidently provide stable housing for Section 8 families while maximizing your returns.