SECTION 8 FAQ

(Real Estate Investors and or Property Management Clients)

Q. What is the difference between Section 8 and CMHA?

A. The Section 8 program is a program where the Government pays some of the tenant's rent. This program is operated by many housing authorities across the country. Here in the Cleveland market the house authority that operates the majority of the Section 8 program is the Cuyahoga Metropolitan Housing Authority (CMHA)

 

Q. Are there other Housing Authorities besides CMHA that I can work with?

A. Sometimes. The Housing Authority that Holton-Wise works with will be based upon the municipality in which the property in question is located.

 

Q. Is the process for working with other Housing Authorities different than working with CMHA?

A. The process of working with other Housing Authorities may vary slightly from the process of working with CMHA. However the occurrence of a different Housing Authority is rare and the differences are very minimal, as such the fee structure, timelines and information in the FAQ are all basically the same.

 

Q. What are the advantages of renting out my property to tenants who are on the section 8 program?

A. The benefits of renting out your property to Tenants who are on the Section 8 program are as follows

  • Your risk of non payment is greatly reduced. This is especially important when you are investing in properties that are in the lower asset classes. The further down the asset class we go the harder it is to collect rent consistently. Eliminating this risk will have a major effect on your net ROI over your course of ownership. Typically CMHA covers 60%-70% of the tenants rental amount every month so evictions are incredibly rate. In the rare event that the tenant ever skipped out on paying their 30%-40% portion they could be kicked out of the program. This is of course a major deterrent. On top of that CMHA will actually pay the back rent that is owed to you after the tenant is evicted from the home. 
  • You increase your tenant pool.  By accepting housing assistance vouchers Holton-Wise is able to market your vacant rental property(s) to more prospective tenants which typically decreases the amount time your rental property(s) sit empty waiting for a qualified tenant.
  • It is not guaranteed, but in our experience the amount of rent that we receive from tenants on the Section 8 program is typically much higher than what we receive from cash paying tenants. Every rental unit is individually inspected by CMHA and then CMHA issues a rental rate that CMHA feels is fair. While it is not guaranteed that you will receive the rental amounts below for all of your rental properties we have included a table of Fair Market Rents directly from the CMHA website as a starting point of reference.

Q. What are the disadvantages of renting out my property to tenants who are on the Section 8 program?
A. At Holton-Wise we believe that some properties, especially those that are located in neighborhoods on the lower end of the income spectrum are much more profitable when being operated on the Section 8 program. However it should be noted that there are some disadvantages and additional red tape that come with operating a rental property on the Section 8 program. 

  • There is going to be an increased amount of paperwork Holton-Wise must perform on your behalf while working with CMHA.
  • Holton-Wise will need to physically appear at CMHA's office multiple times.
  • Holton-Wise will need to coordinate one or possibly more inspections at the rental property with CMHA's inspectors to ensure is is compliant with their regulations.
  • If / when CMHA determines that the property has a violation that needs to be corrected to adhere to their standards Holton-Wise is given a very short window to correct it which means Holton-Wise must give you priority scheduling over all of Holton-Wise's other clients and Holton-Wise may even need to do this multiple times as sometimes tenant's exit the voucher program and or move onto something else while Holton-Wise is going through this inspection process with CMHA.
  • It typically takes anywhere from 30 days to 60 days from the time Holton-Wise approves a tenant's rental application until the time that CMHA approves the rental property for tenancy on the Section 8 program.
  • CMHA prohibits Holton-Wise from passing on some of your rental unit leasing costs to the tenants like Holton-Wise does with normal cash paying tenants.

Q. What if my property fails a Section 8 inspection?

A. If after the initial inspection CMHA deems it necessary for Holton-Wise to make additional repairs to the property before a tenant can be placed a list of items that need repair will be provided to Holton-Wise along with a time period in which the repairs must be completed and a second inspection scheduled. If after a second failed inspection, the entire process would have to be started again from the beginning. 

 

Q. Are there any additional costs involved if I decide to rent out my property to tenants who are on the Section 8 program?  
A. Yes. In order for Holton-Wise to take on the additional workload that Section 8 program creates Holton-Wise charges a fee of $995 per rental unit per vacancy. In addition to that $995 fee Holton-Wise normal leasing fees including but not limited to Unit Leasing Fees, Service Call and Hourly Rate fees for any out of office activities along with any Property Management Fees will still apply in addition to any bid fees that may be incurred when Holton-Wise needs to create bids to repair any and all potential Section 8 violations.

 

Q. I already have Section 8 tenants in my property(s) and I want Holton-Wise to take over the management of my rental property portfolio. Are there any additional costs involved because my current tenants are on Section 8?  
A. Yes and No. While Holton-Wise would not charge you an additional fee for on-boarding Section 8 tenants instead of cash paying tenants Holton-Wise will still charge the additional $995 fee per rental unit per vacancy if you want Holton-Wise to rent your vacant rental property(s) to new tenants on the Section 8 program once your current tenants move out of your property(s). In addition to that $995 fee Holton-Wise normal leasing fees including but not limited to Unit Leasing Fees, Service Call and Hourly Rate fees for any out of office activities along with any Property Management Fees will still apply in addition to any bid fees that may be incurred when Holton-Wise needs to create bids to repair any and all potential Section 8 violations.

 

Q. How do I start the process of renting my property to tenants who are on the Section 8 program?

A. If you are an active Property Management client of Holton-Wise who would like to have your property placed on the Section 8 program send an email to PropertyManagement@HoltonWise.com and will begin processing your request. If you are brand new to working with Holton-Wise you can also send an email to PropertyManagement@HoltonWise.com and we will reach out to you with a singable copy of our Property Management agreement, collect your escrow deposit and begin the process of on-boarding your property(s) into our rental property portfolio. 

 

Q. How is my property advertised as a section 8 property?

A. In addition to your property being advertised by Holton-Wise in the same way that Holton-Wise advertises all of our other rental properties it will include information regarding the fact that Section 8 vouchers are accepted as well as being listed on gosection8.com 

 

Q. How are section 8 tenants screened?

A. Any tenant applying for your rental property with a Section 8 housing voucher will be screened the same way Holton-Wise screens all other applicants. We run a full credit, criminal and eviction history background check. However, the income requirements are slightly different for a section 8 applicant and will be screened according to the regulations put in place by whichever Housing Authority issued the Section 8 to the applicant. More often than not that will be CMHA. CMHA requires Section 8 voucher applicants to pay 30%-40% of the monthly rental payments while CMHA covers the other 60%-70%. CMHA also requires the tenant's total monthly rental amount to fall within an acceptable percentage of their gross monthly earnings. A rent affordability calculator will be used for all CMHA applicants to ensure they are within the guidelines set in place by CHMA.

 

Q. What timeline and sequence of events can I expect if a Section 8 voucher applicant is accepted by Holton-Wise to be a tenant at my property(s)?

A. As there are many variables affecting the move in timeline, there is no way for Holton-Wise to anticipate the exact move in date. However placing a Section 8 tenant into a property typical takes 30-60 days under normal circumstances. Under normal circumstances the sequence of events is as follows.

  • Applicant views the property with a member of the Holton-Wise leasing team. 
  • Applicant applies as per Holton-Wise's normal tenant application process. However the applicant must also provide Holton-Wise with a copy of their Section 8 housing voucher so that Holton-Wise can run the rent affordability calculator. 
  • Upon Holton-Wise approval, a RFTA packet is drafted. 
  • The applicant signs the RFTA packet with a member of the Holton-Wise staff. 
  • The RFTA packet is sent to you (the property owner) by Holton-Wise for signature.
  • Upon completion of the RFTA packet a member of the Holton-Wise administrative staff turns the completed RFTA packet in to the CMHA office. Note the RFTA packet must be turned into the CMHA in person. Digital copies are not accepted by CMHA.
  • Once the CMHA office has processed the RFTA packet CMHA will contact Holton-Wise to schedule the initial inspection of the rental property. 
  • After the initial inspection, Holton-Wise will receive a report stating that the property is ready for tenant placement or that additional repairs are required by CMHA before a tenant can be placed.
  • If additional repairs are required by CMHA Holton-Wise will create a repair bid and submit it to you for approval and payment.
  • Once Holton-Wise completes all of the repairs as required by CMHA Holton-Wise will schedule a reinspection with CMHA. Note the timeframe given by CMHA to do this is very short so Holton-Wise must give you priority scheduling over our clients who are not on the Section 8 program.
  • Once the property has been approved for tenant placement, CMHA will verbally submit a rent offer. The monthly rent offer is the maximum amount of monthly rent that CMHA will allow the property to be rented out for. It is broken down into the amount of rent CMHA will pay on behalf of the tenant(s) as well as the portion of the monthly rent that the tenant(s) must pay out of their own pocket.
  • Upon your acceptance of the rent offer from CMHA, CMHA will send the HAP Contract to Holton-Wise which includes the tenant's move in date.
  • The HAP Contract will be sent to you (the property owner) by Holton-Wise for signature.
  • After HAP contract is signed and received by Holton-Wise the tenant will sign a Holton-Wise lease and pay the required amount of money required to move into the rental property and receive a copy of their keys from Holton-Wise.
  • The signed HAP Contract along with the fully executed Holton-Wise lease will be submitted to CMHA.
  • Monthly payments are initiated by CMHA to Holton-Wise.
  • You (the property owner) will recieve your monthly disbursements under Hotlon-Wise's regular disbursement and accounting schedule.

Q. In an effort to reduce vacancy can Holton-Wise start the Section 8 approval process with a tenant as soon as the property becomes vacant or before all of the rental property turnover work is completed?

A. No. This process cannot be initiated any earlier than when Holton-Wise typically advertises all of our other rental properties for rent. In addition to the reasons we don’t show unfinished rental properties to non-Section 8 tenants if a rental property is inspected prior to the turnover work being completed, there will be failed items and only one additional inspection is allowable by CMHA. 

 

Q. What is a RFTA Packet?
A. The RFTA packet is short for Request for Tenancy Approval Packet and it contains all the necessary information about the tenant, property, and landlord (you) in order to get the Section 8 tenancy process started.  

 

Q. What is a HAP Contract?

A. The HAP Contract is short for Housing Assistance Payment Contract and is the agreement entered into between CMHA and the you (the property owner) on behalf of the tenant(s).

 

Q. What day of the month does the Housing Authority pay the tenant's rent?
A. Rental payments are typically paid out by CMHA on the 3rd of the month and take some time to be processed. Rent payments should be reflected in your owner portal around the 5th of every month and owner disbursements will continue on your normal disbursement and accounting schedule.

 

Q. What is required of me (the property owner) to remain in compliance with the Section 8 program?
A. Once your tenant has successfully moved into your property, annual inspections will be required by CMHA to maintain compliance on the Section 8 program. As your property manager Holton-Wise will coordinate these inspections with CMHA on your behalf and notify you if any new violations need to be repaired.

 

Q. Where can I find more information on CMHA and the Section 8 program?
A. More information on CMHA and the Section 8 program can be found here https://www.cmha.net/hcvp/becomehcvplandlord

 

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