whew! what a December, evictions, late pays - Posted by Dee-Texas

import · December 12, 2002, 6:36pm

2 are sect 8 - Posted by Dianna in Seattle

Posted by Dianna in Seattle on December 12, 2002 at 19:36:20:

Yep, they can/will lose their entitlement. We have 1 section 8 tenant, and this was the first month she had to pay $137 of the $1185 rent. When I called her on the 4th of Dec and asked where’s the rent, her response? “Oh, is the rent due on the 1st?” And then she goes into her story of why she can’t pay. I told her that’s a decision, and per the lease, we will have a processor post an eviction notice on the 5th. She changed her tune, and hand delivered the $$ to our MBE address.

Geez, I have family members out of work (both parents), no unemployment benefits, and struggling. She hasn’t worked consistently since living in our house, and she’s got better furniture than my hubby and I. It’s frustrating.

I’ve decided that I don’t work well with Section 8 “mentality” Yes, I acknowledge that you can get premium rents, but I like good, job bearing, quality tenants.

Off my soapbox…

Dianna in Seattle

import · December 12, 2002, 2:16pm

the problem (HR, if you read this pls respond) - Posted by ken in sc

Posted by ken in sc on December 12, 2002 at 15:16:47:

The problem is… We cant find out their status until we approve them. They (the prospective tenant)dont know or cant tell us if they will have to pay any until after they are approved by us. And the case workers wont tell us either. They always says it depends on the rent and the utilities, etc. Frustrating. How am I to approve someone if I dont know how much they are reuquired to pay as their portion? Section 8 office says they run numbers and will not let someone in who cant afford it. Would like to know how Hal has this figured out.

But even with all this, it has still worked out good more often than not. And probably at a higher ratio than your average blue collar worker.

Ken

import · December 13, 2002, 6:34am

Section 8: Games people play… - Posted by Hal Roark

Posted by Hal Roark on December 13, 2002 at 07:34:14:

In the section 8 program, you have three entities, all of whom are negotiating for advantage at one time or another: the tenant, the landlord, and hud. Once you know what these negotiating gambits are, and when they are likely to occur, it is really easy to counter them.

Tenant failure to pay their portion of the rent at the beginning of the lease is one of the classic tenant negotiating points. Of course they are not going to pay their rent. Landlord might be a softee! How best to tell, then to put him/her to the test! So, they almost ALWAYS do at the beginning.

At first, this really worried me. Then, after I started seeing a pattern, I realized what was going on: folks used to negotiating for everything were doing the same with me. No problem! Now it’s a game! Expect it going in, do a few things, and you will always win.

You did the right thing Dianne: post the eviction notice, and watch the negotiating end real quick. Keep a firm but fair and friendly hand, and your troubles will be lite.

Good luck,

Hal

import · December 13, 2002, 6:41am

Ken: help me understand this… - Posted by Hal Roark

Posted by Hal Roark on December 13, 2002 at 07:41:42:

Ken,

I’m not sure I understand the problem.

Are you saying that section 8 tenants apply for your units, but they don’t know what their portion of the rent payment will be?

Is this true for all tenants… even those who have been on the program for at least a year and who are moving but keeping their same bedroom voucher… or just for new folks?

Also, HUD in your area publishes a utilities list for each bedroom type. Do you have your hands on this?

Finally, I’m not surprised hud agents won’t answer questions over the phone (it’s a device they evidently don’t understand how to use), but are you saying that if you go down to the caseworker in person, and ask about the prospective tenant’s file, they a) won’t let you see it; and/or b) won’t figure out what their portion of the rent should be?

Help me understand exactly what the screening problem is, and let’s see if we can’t solve it.

Hal

import · December 12, 2002, 9:13pm

Re: the problem (HR, if you read this pls respond) - Posted by Nate(DC)

Posted by Nate(DC) on December 12, 2002 at 22:13:51:

I would think that based on their rental application you could figure it out.

Surely your rental application asks about income, no?

The tenant’s required to pay 30% of their income.

So, if income = 0, tenant contribution definitely = 0.

NT

import · December 13, 2002, 12:37pm

The problem - Posted by ken in sc

Posted by ken in sc on December 13, 2002 at 13:37:06:

The problem is with new section 8 tenant only. Tenants who already have a voucher are easy. But with the waiting list here for property, we are mostly getting new applicants.

The prospective tenant comes in or calls. He wants a 2 bedroom. We have one available and he likes it. The section 8 office here wants us to “approve” this tenant and fill out the paperwork that says who owns the property, who pays the utilities and what type, etc. (I know you know that form). Then, the tenant goes to the section 8 office and takes that form with him. Later, we find out the exact amount that sect 8 pays and the tenant pays. Then, we get a date to have the house inspected.

The case workers tell us that they dont run numbers on people until they pick a house. In fact, most of the time the propsective tenant doesnt know who their caseworker is. For awhile, I was telling them that I would not look at their application until I knew who the caseworker was, but that slowed down the renting process because they would just go to another company and to rent or keep calling us everyday wanting us to figure it out.

Yes, I have the utilities list. I have only houses and no duplexes or apts, so the tenant typically pays all.

Ken

import · December 14, 2002, 6:47am

Ahhhhhhh, spoken like a true section 8 pro… - Posted by Hal Roark

Posted by Hal Roark on December 14, 2002 at 07:47:35:

Ken,

I know you are an experienced landlord, but even if I didn’t, the tone of your post says it all: spoken like a true player lamenting from the trenches. Sorry for your aggravation. Let’s see if we can’t make your situation better…

I figured it was the new 8s, but I wanted to be sure. The transfers are easy. I also suspect that your hud office does process it like they have told you: they don’t do any work till they have a confirmed rental. Here, it’s different, but that’s one of those local variances that can happen. In general, the hud offices are understaffed and overworked, so I’m not surprised they postpone work until later.

Given that local scenario, it’s going to be harder to figure what they pay. I still think there are some things you can do, though. Let’s put our heads together (along with anyone else that wants to contribute) to make something happen.

I like Nate’s ideas below. I use formulas in my investing whenever I can, and, in this case, the number won’t be precise, but it will give you a rough idea.
How do you handle your screening? I assume you do a pre-screening over the phone when they call to get info on the apartment. Do you ask, then, about their employment situation, or what income they have coming into their household? I would ask the same thing again during the open house, in person. It’s also on my application.

What are you finding about tenant’s responses to these answers? Are they saying they don’t know what income they have (SSI, etc?). That I find hard to believe. Is there a way you could use this preliminary data to tease out a favorable guess about who pays no rent?

In my experience, it is much harder to get a tenant who doesn’t pay rent with the lower bedroom counts. Why? Because the lower count means they have fewer kids, fewer mouths to feed, and fewer expenses (including utilities, which I also NEVER pay). As a result, even if they have any income (and they usually have at least one stream – ssi, partime job, etc) it usually doesn’t cover the family cost of living allotment or the utilities. As a result, they are paying a portion to you as landlord.

Not my favorite scenario.

In contrast, when momma has a 3 or 4 bedroom voucher (for example), she has more kids, and so any income is eaten up by the family cost of living calculations, and, she has a bigger house with greater utilities, which also gobble up more of her discretionary income. I actually have had tenants in the past that not only paid nothing for a beautiful single family home (thanks to uncle Sam), but hud also GAVE THEM money each month to help cover utility costs. (Is this a great country, or what?..).

So: am I saying don’t invest in lower bedroom section 8 homes? Heck no! I’ve got a 2 bedroom getting filled in the next couple weeks that has been a reliable atm and I love the little house. Wish I had 100 of them. Each bedroom count, though, presents different needs and this fact, coupled with your local situation, may make it harder for you to determine who gets the American Dream (their own home, paid for 100% by someone else) versus who actully has to contribute a little each month.

I look forward to hearing your thoughts and learning from your experiences…

Hal

import · December 13, 2002, 5:07pm

Re: The problem - Posted by Nate(DC)

Posted by Nate(DC) on December 13, 2002 at 18:07:03:

Ken -

Here’s a shortcut. Since you know the tenant pays 30% of income, and you know their income (from your application) and the amount of the utility allowances, you should be able to do a rough approximation.

I’ll just pick some numbers here. These are DC area numbers so they will seem very high to you.

3BR FMR = $1573. Utility allowance for a detached house = $267. Net rent = $1306.

If they have zero income, they pay 30% of zero, or zero, per month. The government sends me a check for $1306 and sends the tenant a check for $267 so they can pay their utilities.

If their income is $600 per month, they pay $180 per month on shelter costs. This is less than $267, so the government still sends me a check for $1306, and sends the tenant a check for $87 to make up the difference.

If their income is $1,000 per month, they pay $300/mo, so I get $33 from the tenant and $1,273 from the government.

Etc etc.

NT

import · December 14, 2002, 10:38am

spoken like a true section 8 pro wannabe - Posted by ken in sc

Posted by ken in sc on December 14, 2002 at 11:38:50:

Maybe not a pro yet, but learning. And I do like the program (for those out there reading this thread, I know you like it) and have had success. Just trying to get it wired.

I have 2, 3 and 4 bedrooms and not seen a pattern as to when you get full payment for a house by that method. We get a lot of single moms with kids who sect 8 want in a 2 bedroom. I have a 4 bedroom where the Mom pays me almost $400/mo out of $800 (bought that already rented). I like the 4 bedrooms as the rent is so high compared with the purchase price for me. 3 bedrooms tend to rent the fastest.

As fas as screening, we dont do a lot over the phone. I run a property manegement company and am terrified of the govt trying to get me for unfair renting practices. We make sure that every person who calls gets a full list of property available and the right to see it. That way I am never going to be accused of discrimination. The govt pays people to go to companies and try and see if we discriminate. I believe but do not know for sure that we have had calls from these type inspectors. So I run my office accordingly. We start the screening when we have a prospect actually interested in renting. Then, I of course have a thorough application. For 8’s, I am mainly checking at least 2 landlords past to make sure they are good people and did not break the lease or trash the place. The hud office here has already done a criminal check. But I have not known exactly what to do with prospects with some income, not knowing how it will eventually play out numbers wise. I have been very fortunante with tenants and as long as I train them that I am very serious about their portion of the rent, it has worked out well.

My nitch or method has been to have a little higher quality product. I have nice houses and do have central ht/air and make them very appealing. My theory has been that they will not only not want to lose their voucher with hud, but not want to lose my house, as it is the best they are going to get via section 8. Most of the other sect 8 houses available are in worse areas and in inferior condition by far. We are also very attentive to repairs needed etc. I want the long term tenant.

Appreciate your thoughts and advice. I am going to look at Nates method. That may help.

Ken

import · December 14, 2002, 5:15pm

We think alike… - Posted by Hal Roark

Posted by Hal Roark on December 14, 2002 at 18:15:24:

Ken,

Many of your methods are ones I use, too. I do think you could ask more questions about income, though, without violating federal fair housing, at least during the open house or application. In my experience, the tenant knows how much income they have coming in, and from what source, and when they only have ssi without a job, it’s a fairly good guess that their portion will be small. Sound like you are doing a fair job screening for character; I would screen more around financial. I want to know details on the application, and, in my experience, tenants know them and have no problem relaying them.

Do you do credit checks on your 8s? It’s worth a look. It’s a hoot. I’ve had some 8 tenants with 670+ fico scores! I’ve also had some with potentially negative scores. This can be revealing about character and ability to pay, especially if they have charges. How are you paying for that, Ms. Tenant?

I, too, believe in offering a product to the customer that has high value. This creates demand, and people answer my questions to get the one product available. Sounds like you are not asking enough around financial stats. Maybe I’m missing something here, too. If so, we can surely try to figure it out in person at the convention.

In your area, sounds like 2 bedrooms are big demand. Mine is different, and I know it can vary widely by county based on availability of housing stock and present need. I’m to the point, Ken, where I just don’t take anyone any more in a 3 or 4 bedroom that pays anything… and I have loads of those tenants to choose from. It’s not automatic, though, and one must screen to find these tenants. That’s not the only thing I choose, but it is one of my criteria.

I also coulden’t agree with you more about your statement of training the tenant into your expectations and routine. It’s a biz relationship, and the clearer both sides are about their needs and expectations, the liklier things will go smoothly.

Would pressing for more financial info make a difference?

Hal

import · December 16, 2002, 6:32am

Financial info - Posted by ken in sc

Posted by ken in sc on December 16, 2002 at 07:32:24:

I get all that info on the application. My ap has a DETAILED financial section. It actually has a budget section where we break down all payments that they have per month including the car pmts, other loans, credit cards, utilities, etc. This is after the section where I have determined their net income per month. So the info is there. It is just if I have a new 8 prospective tenant coming in who wants a “3 or 4” bedroom, they don’t know their caseworkers name or amount of voucher, and they make $1400/mo + $300 in child support. Do I show them 3 bedrooms, or 4 bedrooms? If they take a 3 bedroom, will they be paying me much? It is hard to tell. If I show them a 4 bedroom in hopes of getting all rent from hud, sometimes hud comes back to us (after 2 or 3 weeks of having the house “rented”) and says that the prospective tenant really shoud be in a 3 bedroom, now that they have gone over their file more thoroughly. This is where it gets hard to figure. But with time and experience I will eventually understand it all. The gov’t is good and bad to work with and one must do his/her best to keep the bad to a minimum. You know, one of the best parts of sect 8 that is often overlooked is how you are helping these people. SOme really need the help and are thriled to get into a quality house and be able to start over. I have some great sect 8 tenants who I really like. And really none that I dont like (can’t say that about my “normal” tenants). I have only one house where the amount from hud does not cover my loan payment. All others the amount from hud more than covers the payment. That way, it is easy to train the tenant because I have money and time working for me. I can file eviction over a $25 tenant portion of the rent and get late fees until they figure out that I really meant that part of the lease that said they must pay and pay on time.

I am going to try Nates method for awhile and see how it matches up with what the hud office says. And “rules of thumb” like that are good for my secretary to follow if I am not in the office.

Ken

import · December 17, 2002, 5:54am

I see it now… - Posted by Hal Roark

Posted by Hal Roark on December 17, 2002 at 06:54:31:

Ken,

It makes sense that you have a detailed formula for finances on your ap; so do I. I also understand, now, that you are looking for a system that your help can follow. Also, it seems like the bigger problem is that you don’t know the bedroom count going in. That is a huge problem.

I can see where someone calls, wants to see the place, and then you don’t know what to show… a 3 or 4 bedroom? This is a big problem, as far as efficiency goes.

In contrast, in my area, the 8s come and know their bedroom count. They have it stamped on their initial paperwork (here it’s a green sheet) to prove they can get the bedroom I’m showing. The new ones don’t always know their portion of the rent, but, with some of their financial info at hand, I can reliably guess/calculate what their portion will be, if anything.

It doesn’t sound like the finances are the real issue. The real issue is you don’t know what bedroom rate they are approved for when you are screening tenants.

I know this sounds stupid asking, but let me be stupid: are you SURE they don’t know their bedroom count? When they look at the property and get the initial paperwork filled out (that starts the inspection process, etc) are you sure their bedroom count isn’t indicated on there somewhere? How do they know what to look for?

I, too, have had hud “renegotiate” after getting someone signed up, and I don’t allow that any more. That’s why, as part of the open house, I demand they show me that green sheet (with the bedroom rate stamped and approved already), along with id, $20, etc.

I think you need to get that from hud, somehow. I hate saying this, because I know it’s a waste of time, but can you make phone calls to the persons unknown caseworker who doesn’t answer the phone anyway? Is it worth a personal visit? I know already it’s not feasible for you, with your company, to take time off for every potential tenant and do this.

I would think, Ken, with your property management company that you would have some extra clout with the hud office. Any way you can get to know one of the honchos real well, and get some favors for you when you need it? For example, as a local reia board member and active 8 investor, I’m well known to the local hud folks. I do things to promote their program, help them out, etc. They, in turn, return my calls to their private cellphones should I call. I don’t abuse this, because I know how valuable it is, but, should I call the landlord liason, she will get back to me within 24 hours. Coulden’t you develop a similar relationship over time?

Finally, you are absolutely right about the win-win nature of the section 8 relationship. When I first got into this, Ken, I was leery of what these low class tenants might be like. Honestly, I had the typical class bias and thought that some might be dangerous, liars, thieves, etc. That was all a projection of my own ignorance and insecurity.

While there are no doubt con artists in the program, I have DEFINATELY not found that there is a greater proportion of bad tenants in this program then the general market. In fact, I’ll attest to the opposite: when one runs this program well, like a pro, my experience is that you can actually get some DELIGHTFUL tenants.

I have great tenants. I’ve got single moms with lots of kids who are genuinely greatful of living in a beautiful house. They keep my places immaculate, maintain their kids and properties well, and resign the lease every year like clockwork. For my part, I am extremely responsive to their needs when something needs to be fixed (which is rare, since I supply no appliances, the thing most likely to break). When one learns to manage the tenants, property, and hud like a professional, one can outperform one’s competitiors in this niche and make a lot of money. And all the while, one is providing a genuine public service to those who need it. Now, if that ain’t win-win, I don’t know what is.

This thread is about to disappear off the board. I hope the banter back and forth has provided some help. It seems to me that the biggest problem is the tenant not knowing their bedroom count, and the resulting inefficiency that causes in your screening process. That’s the part I would attack and solve, if it even can be solved (maybe it can’t, because of the way your county processes things). The financial stuff will fall in line afterwards.

Good luck, and see you at the convention,

Hal

import · December 16, 2002, 1:31pm

Re: Financial info - Posted by Nate(DC)

Posted by Nate(DC) on December 16, 2002 at 14:31:16:

Ken,

Generally, when the family is granted a voucher, it will be for a specific unit size. Even if they are new to Section 8, they should know what their unit size is; if not, the caseworkers ought to be able to tell you that. Could be as easy as a call…“hi, Mr. Caseworker, I want to show them a 4BR, but does their voucher cover a 4BR or not?”

Besides, what you are really looking at is the difference in the utility allowance, which should not be all that substantial…particularly in SC, I can’t imagine the difference between the 3BR allowance and the 4BR allowance being more than $30/mo or so.

And the allowance sheet IS public info, so you definitely should not have a problem getting that from the housing authority. Some places that are really big, dysfunctional bureaucracies are hard to get - in one case (City of Philadelphia) I actually had to go into the Section 8 office and sign in, waiting with all the clients until my number was called, and then the rep did not want to give it to me. I told her “it’s public information, you have no right to withhold it, and I’m not leaving this office until you give it to me.”

She went in the back and a few minutes later came out with a copy and I was on my way.

Hopefully the people are friendlier down in your neck of the woods.

NT