Denver's ongoing housing shortage, increasing home prices, and growing population create affordability issues for many residents, especially those in lower income brackets.
Fortunately, many of these people can find relief in the form of local and federal housing assistance programs, including Section 8 housing. Although the city provides some homes for this purpose, it also relies on landlords to join the program.
Those who agree to participate in this program are assured of guaranteed rental income, but only if your rent prices meet the Section 8 rent reasonability thresholds. Read on to find out if this could work for you.
How Does Section 8 Housing Work?
The Section 8 Housing program provides qualifying families with vouchers they can use to pay a portion of their rent. Families must apply with the Denver Housing Authority (DHA) to sign up for housing assistance.
If they meet Section 8 eligibility criteria to qualify for housing assistance, the DHA vets applicants according to their rental history and tries to match them with a suitable home at a price they can afford.
With other rental assistance programs, tenants are limited in their housing choices. Section 8 tenants may approach private landlords for accommodation.
Landlords may also apply via the DHA for consideration as a housing provider as long as:
- Their homes meet health and safety standards
- They submit to regular inspections
- They satisfy rent reasonability requirements
Since the DHA does no additional checks, it's important to screen these tenants as you would any other.
What Is Reasonable Rent?
While you are free to charge as much as you like for your Denver investment property, market research is the best way to calculate a reasonable rent amount. This research studies nearby rental properties to help determine a fair rate.
The HUD uses a similar process when calculating reasonable rent. They consider the following in their studies:
- Property location
- Age and type of home
- Accommodation quality
- Property size
- Number of rooms
- Amenities provided
So, take these factors into account when calculating your desired rent amount.
Once the DHA has accumulated this information for an area, they use data from the Public Housing Authority and local Chamber of Commerce to arrive at a Fair Market Rent (FMR) value for each neighborhood in an area.
Fair Market Rent Explained
FMR equals the rental rates for at least 40% of standard homes in a designated location. The DHA usually awards a Section 8 tenant with vouchers valued at 90% to 110% of FMR.
Before granting vouchers to an applicant, the DHA will also look at their income and expenses to ensure they can afford to pay the rest of the rent.
Do You Need a Little Help Navigating Section 8?
Being a Section 8 landlord guarantees you a portion of your rental income no matter what. Most recipients of these affordable housing options also make good tenants. If they don't comply with their lease agreements, they can lose their low-income housing benefits.
Walters and Company Property Management can help you figure out if it's worth it for you to become a part of this initiative. We can help you set a reasonable rent that preserves your profits and assist with property inspections to protect your property.
We have a reputation for exceeding our clients' expectations and many years of experience to ensure seamless services. Discover a more convenient way to manage your Denver properties today.