One of the great longtime subscribers to this blog, Anneliese, reached out to me via email about my recent post "Chicago's 'Ending Veterans Homelessness Initiative.'" She had some questions about the Sec 8/Housing Choice Voucher (HCV) program and rental vouchers in general. Anneliese made some great points and raised some great questions, so I asked for her permission to share our email conversation with you.
Anneliese: Read the story on the veteran's homelessness initiative - does the city off-set the rent for the veterans in the form of housing vouchers?
This guy is no paragon of human virtue, to be sure. In fact, I think he's a real skeez [Urban Landlady's note: LOL!]. I personally think he deserved all the trouble he got, if that's what he was about. Do you often see other landlords being bare-faced opportunists like my coworker? I would imagine voucher programs like the veteran's program attract that type of person.
I have rented to families with Sec 8 vouchers in the past and I definitely would again. Some of my best tenants (always paid on time or even early, left my place clean & undamaged). And some of my worst. People can't put a whole group of tenants in one box.
Some landlords make the mistake of relying on Sec 8 to "screen" the applicants who approach the landlord. This is NOT a smart business tactic. Just because a person has a voucher you don't just look at dollar signs & accept them. You STILL do your due diligence (credit check, background check, home visit, previous landlord reference).
Then about your friend letting the place fall apart, it's confusing because Sec 8 property inspections are known for being tough to pass (at least in Chicago). Was this in recent years? There are annual inspections, plus a tenant can call any time of year to report repair issues a landlord doesn't fix. If the landlord doesn't pass inspection on the 2nd try Sec 8 suspends the payments.
Sec 8 does allow landlords to charge what's called Fair Market Rent (usually slightly higher than average). This is kind of because the landlord is required to meet HIGHER (not lower) Housing Quality Standards than landlords who don't rent to voucher holders. If Sec 8 didn't allow this expectation for slightly higher rents they would be stuck with a bunch of renters they couldn't house because no landlord would bother with the inspections & bureaucracy. You can Google FMR & HQS for some interesting insight.
Don't let this kind of stuff scare you yet. There's a LOT of false or misleading info floating around out there. Get good solid intel first then decide. Let me know what you think. Thanks for reading.
Anneliese: I think what he did was only do one round of Section 8, then sold the building, and used the money to buy a better building.
Urban Landlady: Wow. Thanks for the additional info. If you don't mind me saying so (and I suspect you don't based on how you describe him), this guy took a boneheaded shortcut by cutting corners when a better LONG TERM strategy would have been to keep the building, maintain it, and collect a legitimate rent. Building wealth as a real estate investor is about cash flow (regular income over time) versus a quick, shady profit.
Be the first to read new Urban Landlady blog posts. Type your email address in the box and click the "create subscription" button. My list is completely spam free, and you can opt out at any time.