Interesting Section 8 Ruling


#1

http://www.sfexaminer.com/judge-grants-motion-ordering-sf-landlord-not-discriminate-section-8-tenants/


#2

Interesting comment in that article:

A huge security deposit 2x the rent will exclude 99.99% of section 8 applicants. Just have to do it for all applicants, don’t be selective.


#3

Section 8 only pays so much per month. If the rent is above that, then they are automatically eliminated.

I know people in Michigan that love section 8. They say the payments are never late. Also, the tenants never complain about anything. They are too scared of losing the free money from the government.


#4

With the way the rental market is here, Sec 8 tenants have a tough, tough time finding any available units (unless really bad areas or way out in the sticks). The thing that sucks is that an owner who has an existing contract with a Sec 8 tenant (at least in Oakland) can not terminate participation in the program upon contract anniversary even with sufficient notice given to that tenant.


#5

What is the landlord increases the rent beyond what the section 8 coupon covers? Then the tenant would have to pay the difference or move.


#6

Ah, but there’s the rub - the Housing Authority in charge probably won’t allow you to raise the rent (at contract anniversary) beyond what it deems to be reasonable (relative to other units in complex or area) and that is usually less than/equal to market. So, despite Sec 8 not being subject to rent control that is how they suppress the pricing to a great degree. And one wonders why owners are no longer going the Sec 8 route? Sure, there used to be the incentive of rent on time every month and a steady tenant, but that is lesser of a big deal now in a hot market. The thing is, ANY tenant (Sec 8 or not) can be one’s ultimate nightmare so you mind as well get true market rent. I personally go a tad lower so that tenants are happy and I don’t have the constant turnover that can eat into that cash flow. That is Landlord 101. Not for the faint of heart or light in the pocketbook.


#7

Great news that hit my phone from the California Apartment Association just now:


#8

Not good, but hopefully it gets challenged…

http://www.sfexaminer.com/court-upholds-sf-law-requiring-landlords-accept-section-8-vouchers/


#9

Of course not all section 8 tenants are undesirable, as with any class of people. Discriminating based solely on section 8 status is not a smart move, unless your property is really high-end but then the asking rent should be able to exclude voucher holders. The reason some landlords don’t want section 8 tenants is a probability play, because at least it is perceived that section 8 tenants are more likely to be problematic than regular tenants. I don’t know if there is any such data to back it up, but even if it exists it’s probably not published in order to protect certain class of population (just like BART withholding video footage of the robbery on BART trains last year in order to not reinforce the stereotyping of ordinary citizens, but people would just reinforce based on their guesses anyway).

I think a good indicator is the credit score, and at least for now it is ok to “discriminate” based on that. There are probably many section 8 tenants with bad credit scores that could actually be good tenants, but my guess is it is much more rare that a section 8 tenant with good credit score turns out to be a bad tenant. A good credit score shows that they care about their financial responsibilities. The same criteria goes for regular tenants as well.

But if every landlord takes this route and starts using credit score, then eventually another law is going to be installed to not allow that because part of the goal of a liberal government is to get people housed regardless of whether they are worthy of the housing opportunities (which is a very subjective matter up for debate). It’s a constant fight.


#10

To me, Sec 8 participation is very much like why a lot of owners here don’t like inlaw units. You have to incentivize it, not penalize it, for owners to want to participate. Sure, some people will batch that why should owners get a “bonus” incentive when they are already getting rent? Well, do you want more housing or not at the end of the day?


#11

Santa Clara county max subsidy:
https://www.scchousingauthority.org/section-8-current-participants/housing-choice-voucher-current-participants/voucher-payment-standard-fmr-utility-allowance/

Max income to qualify (need to be extremely low or very low):
https://www.scchousingauthority.org/section-8-housing-programs/waiting-lists-applicants/income-limits/

Occupancy standards:
https://www.scchousingauthority.org/section-8-current-participants/housing-choice-voucher-current-participants/subsidy-standards/

Family of 4 needs to be below $59,700 and could get $2,442 towards a 2 bedroom.


#12

You’re not going to see section 8 in A areas. If you’re going to buy rentals in C or D areas, then you might as well go section 8 tenants. The government is handling you a check every month. It won’t be late, and they won’t miss a payment. Yes, they cap the annual rent increase, but that’s not really an issue outside the bay area in C and D areas. Rents don’t increase much anyway.


#13

To be fair, in both SF and Oakland they have increased the section 8 voucher limits to be close-to-or-slightly-above market in order to provide more incentives to landlords. Since the limits are not zipcode-based, for C and D areas landlords can get more money renting to section 8 than regular tenants (although housing inspector will adjust based on area within the city, but still). And in both cities the housing workers appear to be more friendly than before based my personal experience, which is very important to a lot of landlords including myself.


#14

In my own experience, own skin, and still suffering the consequences of one unit over here rented to section 8. The house is crumbling. After 3 years, finally the tenant, who I believe had the support of the lazy or cheap landlord, put up a fallen fence. The front of the house is seeing rotten, and the tenants, don’t even ask me why they have kept the recycling and garbage cans out there for the last 2 years without the city “still investigating” doing nothing.

I don’t think the section 8 is bad. What is bad is the lazy, unconscious, lack of empathy landlord that allows his home to be turned into a drug dealing enterprise, the tenants harassing neighbors, and so on.

The famous house I always talked about in my hood cost the owner $100K in repairs. He sold the house at a loss. All of that after 3 years of us telling him kick them out of here! Whatever he got in 3 years from the program went out through the window.


#15

How can one sell at a loss in this market? :face_with_raised_eyebrow:


#16

This market, or the market 1 year ago? :crazy_face:

Sold the house for $650K, cost of repairs $100K.

The idiot lost big time. I am saying idiot because even the cops themselves guided him to start an eviction process. “please go to the sheriff dept. they told him”. His response? Oh, OK, I will go the cops and…:laughing:

I think I saw the spark of death in that cop’s eyes when she heard such stupid proposition. And she was female. :scream:


#17

Ah, now we get more fake math where key facts are missing.


#18

There’s a house in the hood pending. One of those pocket listings, thanks to somebody acquainted with the bank, my guess.

It is not a 4/2 but a 3/1, not remodeled or anything like that since 1983. I helped them to paint the exterior a year ago. Per the sellers, a friend of mine, sold for $750K.

I would say it doesn’t take a math genius to figure it out. A house remodeled, sold for $650K a year ago with a loss of $100K, a 4/2 against a beat up 3/2 home sold for $100K more a year later.

The dummy lost about $200K+ if he had kept good tenants in it, as we begged him to do.

But section 8 baby! :smile::smile::smile:


#19

What? Now you’re comparing two different houses? This makes even less sense. The only way to know if the person made money on the house is:

Selling price - purchase price - remodels - selling cost = Profit or Loss


#20

Slow down Stormy…slow down!

House is on the market for $650K. Sold! $650K -$100K= $550K

He would be selling right now, with a brand new condition for $800K+

Had he kept good tenants, his expenses or losses would be $80K at that time if we add soft costs of repairs. Not counting realtor’s commission.

Under your thinking, good, I am going to sell my house for $400K. I paid $350K. Gee! I got a profit!

Except I can sell it for $800K.

What counts is the present market value.