The Arizona Department of Housing offers several programs to support those in need of affordable housing. The Section 8 Housing program is the best-known of these and the only one that allows qualifying individuals to rent from private landlords.
Under this program, qualifying families can use vouchers provided by the HUD to pay a portion of their rent to a landlord of their choice. This is an excellent way to earn guaranteed income from your rental properties, but you must meet certain criteria if you want to reap the rewards.
One of the major factors in determining whether you can become a Section 8 landlord is rent reasonableness. Read on to find out whether your rental property meets the Section 8 rental guidelines.
Section 8 Reasonable Rent Factors
Reasonable rent calculations depend on two factors. These are:
Fair Market Rent
Fair Market rent calculations involve a simple rental analysis for a particular area. The HUD calculates this by researching rent prices in a neighborhood to calculate the 40th percentile for the area.
The 40th percentile is an amount that's less than the price of 60% of the units in an area and higher than the rent amount for 40% of the units in an area.
They don't include luxury homes or new homes (less than 15 months old) in their calculations.
PHA Payment Standard
This is the maximum amount that the Public Housing Authority will pay per number of bedrooms in a rental unit. In most cases, the PHA payment standard works out to be between 90% and 110% of the fair market rent in a neighborhood.
This is only the amount that the PHA pays; Section 8 tenants must pay any extra amount to meet the landlord's desired rent. So basically, as long as your rent price is 30% or less above the PHA, you could become a Section 8 landlord.
Benefits of Being a Section 8 Landlord
The biggest benefit of being a Section 8 landlord is knowing you'll receive at least 70% of your monthly rent through the voucher program.
Additionally, most Section 8 recipients make good tenants. If they don't pay their rent on time or comply with the terms of their lease, they could lose access to the voucher program.
It's still important to screen these tenants using your usual procedures. The Department of Housing only screens prospective tenants based on affordability criteria.
If you're interested in becoming a Section 8 landlord, you must register your property with the county assessor and enter a contract with the City of Phoenix. You can earn an incentive payment for your efforts.
Should You Become a Section 8 Landlord?
The Section 8 housing program is a worthy initiative that benefits both landlords and tenants in the USA, but you might need some expert help deciding whether it's a profitable choice for your rental property.
PMI Phoenix Metro is a full-service property management company based in Phoenix, AZ. We offer a full range of services for rental income optimization.
Our team can assist you with landlord compliance tips and a Phoenix rental evaluation to help you decide whether being a Section 8 landlord is a good option for you. Reach out today to start making the most of your Phoenix investment properties.
