Every month, thousands of Nashville residents experience homelessness, despite ongoing programs to help these people find suitable accommodation.
As a Nashville investment property owner, you can do your bit to alleviate this problem by becoming a Section 8 landlord. Before you let your noble intentions get the better of you, though, it's best to calculate whether this is a financially feasible option for you.
Keep reading to find out if your rental rates comply with the HUD's rent reasonability criteria.
What Is Section 8 Housing?
The Section 8 housing voucher program is a government initiative designed to help low-income earners afford decent, safe accommodation. In Nashville, the Metropolitan Development and Housing Agency oversees this program.
To qualify for housing assistance, prospective tenants must earn less than 80% of the median income for the city.
Under this program, needy families receive vouchers to use toward paying a portion of their rent, and they pay the rest. In most cases, the tenant only pays around 30% of the total housing cost.
Candidates must apply to the MDHA to qualify for Section 8 housing in Nashville. If they meet the criteria, the organization tries to match them with accommodations in their affordability range.
Becoming a Section 8 Landlord
A major benefit of becoming a Section 8 landlord is the guarantee that you will receive up to 70% of your rent on time courtesy of the voucher program, but there are other benefits, too.
To continue to benefit from subsidized housing, tenants must also pay their portion of the rent on time. If they damage the landlord's property, they will also lose their right to benefit under the Section 8 housing program.
As a result, most Section 8 renters make good tenants, and they're likely to renew their leases too.
Landlords who want to participate in this program can apply to the MDHA. Landlord requirements include:
- Maintaining your property at an acceptable standard
- Agreeing to routine inspections
- Charging a reasonable rent
What Is Reasonable Rent?
Conducting a rental market analysis is a good starting point for calculating a fair rental rate, but the HUD has its own set of criteria when it comes to calculating reasonable rent.
The MDHA also uses a local area analysis when setting rent limits. They use criteria such as:
- Location
- The quality of the accommodation
- Unit age and type
- Size of the home
- The amenities provided by the owner
They use data from the local Chamber of Commerce and Public Housing Authority to arrive at a figure for Fair Market Rent (FMR). This amount equals at least 40% of standard-quality units in an area.
The housing authority will pay between 90% and 110% of the FMR value for each zip code, depending on the Section 8 guidelines for the area.
Managing the Intricacies of Being a Section 8 Landlord
Being a Section 8 landlord has several benefits, including guaranteed income and lease renewals. It's a good option to consider as long as the HUD's reasonable rent rates can cover your costs.
PMI Music City can help you navigate the intricacies involved in becoming a Section 8 landlord, assist you with your application, and ensure you comply with the HUD's accommodation and rental standards.
Our team is committed to providing exceptional customer service, preserving the value of your investment, and ensuring you maximize your rental income.
Explore the ways we can help you make the most of your Nashville rental property today.
