As a landlord investor, you have various options beyond the traditional rental agreement. Some landlords prefer utilizing the lease option strategy, while others find renting out properties to “section 8” tenants appealing.

What exactly is a section 8 tenant? Section 8 is an affordable housing program aimed at assisting low-income families in finding suitable housing. Administered by the United States Government under the Department of Housing & Urban Development, the program provides a housing supplement for tenants to apply towards renting a place to live.

While the section 8 program works well in some markets, landlords in other areas may report encountering significant challenges. As part of your decision-making process, it’s essential to gather insights from other landlords in your local area regarding their experiences with the program.

The Pros of Section 8

One of the main reasons landlords consider the program is the guaranteed income it provides. With the voucher system, HUD pays a substantial portion of the total rent directly to you, while the tenant covers the remaining amount. The ratio of government payment to tenant contribution varies based on the tenant’s income.

Unlike traditional rental agreements, where rent payments aren’t always guaranteed, section 8 offers a reliable source of income. While landlords typically collect a security deposit to protect themselves from non-payment, this may not suffice, especially considering the costs involved in evicting a tenant.

Another advantage of the program is the built-in accountability. Section 8 involves rigorous administration and qualification processes. Tenants must meet strict criteria to qualify, making them less likely to risk losing their section 8 benefits by violating program rules and potentially facing HUD reporting by the landlord.