The Housing Choice Voucher (HCV) program, often referred to as Section 8, is federal government assistance, administered by HUD, for very low-income families, the elderly, and the disabled. The purpose of the program is to provide participants with affordable, decent, safe, and sanitary housing in the private market. Participants are provided with financial assistance, in the form of a voucher, so they can find their own housing within single-family homes, condominiums, townhouses, or apartments in any geographical location and choose any housing, provided it meets the requirements of the program. The goal then, of the Section 8 program is to deliver on the promise of housing choice and opportunity for participating individuals.
On this episode of Property Management Brainstorm, Bob speaks with a panel of guests to discuss Section 8, some of the challenges in working with Public Housing Authorities (PHAs) and HUD, and why the program at times seems elusive. Joining the show on the panel is Tyler Craddock, the Governmental Affairs Director for NARPM; Patti Robertson, Owner and Principle Broker of Property Management Inc (PMI) Virginia; and Amanda Han, Property Manager and Chief Operating Office of Cornerstone Properties in Aiea, Hawaii.
Topics Covered
[2:15] Tyler, Patti, and Amanda introduce themselves and their companies.
[3:15] Tyler explains the overall Housing Voucher Program policies and what reforms might be coming in 2021 and beyond.
[7:00] Patti and Amanda comment on why the goals of housing security and geographic choice have sometimes proved elusive.
[11:05] Is the Section 8 program able to keep up with the escalating cost of housing and ever tightening housing market?
[16:15] Why the market pressures on property management companies to fill properties quickly for their clients can sometimes make placing Section 8 tenants challenging.
[20:55] The screening process for Section 8 participants.
[23:00] Is HUD aware of these challenges and is there bipartisan support in Washington DC for reform?
[24:05] Common misconceptions of Section 8 and the Housing Choice Voucher program.
[30:00] Summary with Patti, Amanda, and Tyler sharing their closing thoughts on Section 8.
Connect with Patti Robertson
PMI Virginia
Connect with Amanda Han
Cornerstone Properties Hawaii
Connect with Tyler Craddock
NARPM Government Affairs
Connect with Bob Preston
Property Management Companies in San Diego
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Transcript of This Episode
Bob Preston:
Housing choice voucher program often referred to as section eight is federal government assistance that administered by HUD for very low income families, the elderly and the disabled to afford decent, safe, and sanitary housing in the private market. Since housing assistance is provided on behalf of the family or individual participants can find their own housing, including single-family homes, townhouses, and apartments. The participant is free to choose any housing that meets the requirements of the program and is not limited to units located in subsidized housing projects. So the goal then of the section eight program is to deliver on its promise of housing choice and opportunity for low income families, elderly and disabled individuals. On the show today, I have a panel of guests, property managers who are members of Naropa, the national association of residential property managers, as well as Tyler Craddick , the government affairs director for an ARPA to discuss section eight, how it works and the responsibilities in the program of the tenant, the landlord, the housing agency, and of course, HUD, hi everyone. And welcome to the show. So great. You're all with me here today to discuss this important topic, I was hoping to kick things off. Each of you could just introduce yourself the name of your company and where you're located. So Tyler, let's start with you.
Tyler Craddock:
Bob's great to be joining you today. My name is Tyler Craddock. I'm the government affairs director for the National Association of Residential Property Managers (NARPM). My office is located in Washington, DC, and also have an office in Richmond, Virginia.
Patti Robertson:
Thanks for having me. I'm Patti Robertson. I own a property management, brokerage in Hampton Roads, Virginia called PMI, Virginia. And I also serve on a one of our local city rental advisory boards in Norfolk , VA. I do a lot of section eight and I can't wait to talk about this topic.
Amanda Han:
My name is Amanda Han , and I'm with Cornerstone Properties and we're located on the island of Oahu here in Hawaii, and I've also served on the government affairs committee for NARPM.
Bob Preston:
Tyler, Patti, Amanda, you've all got great qualifications. This is going to be a great conversation about section eight so let's go ahead and kick things off. Tyler in your capacity with NARPM , you might be best prepared to explain the overall housing voucher program policies. And maybe if there are some changes that might be coming into the fold in 2021 and beyond?
Tyler Craddock:
In the nutshell, housing choice vouchers, for those of you who've not worked with them before, in essence are a replacement for public housing. In the past, we built buildings, we've built large towers in different parts of cities, and that's how we have helped house people who are in need of housing assistance. The way the housing choice voucher program developed was as a way that the same consumer can take that voucher to a participating landlord and live in a community of their choice. There are a couple of developments of ideas and things that are being kicked around if you will, that I think require some discussion.
The first is the idea of reforming the program. Let's make the program so nice that people want to participate in it. And so that was the genesis for a piece of legislation that has been working its way through the Senate now, and it's called the Choice in Affordable Housing bill. It's a bi-partisan bill meant to provide funds to PHAs, that is the public housing authorities, to be able to offer signing bonuses, to landlords who rent a unit to a housing choice voucher holder in a low poverty area. It also provides funding security deposit assistance and helps incentivize PHAs to maintain a dedicated landlord liaison on staff. This bill would also make more use of small area, fair market rents. And that's very important because in those higher opportunity areas where housing costs are usually more, that housing choice voucher would be worth a little more. It would allow the housing provider to request a pre-inspection of their unit.
A second bill that goes in a different direction with section eight is called HR 4496 , the Ending Homelessness Act of 2021. This bill just by its very nature has legs because it's been introduced by Maxine Waters, she's the chair of the House Financial Services Committee. Basically what that would do, is make Section eight an entitlement . What's also in that bill that's of particular interest or will be of particular interest to property managers and housing providers is that it also provides national source of income protection. In other words, a housing provider can't say, oh, I don't participate in the housing choice voucher program. You have to treat that and qualify that person just the same as if it was good old fashioned W2 income. And now the third thing, that we see happening on the state level with regard to Section Eight, is this continuing discussion of source of income protection.
Bob Preston:
Tyler, thanks for the summary. So these are, I take it, some improvements that are being proposed into the program and some observers who track these programs along with advocate groups feel that the overall goals of the housing voucher program or the Section eight as we commonly call it, has proved elusive. It really hasn't fulfilled the true promise of housing security and perhaps geographic choice. Patti and Amanda, any comments on that?
Patti Robertson:
You're exactly right. The whole premise of the program is housing choice voucher with choice being the operative word. That means tenants should be able to take that voucher and get into a better neighborhood, a better school system, a school system where they have more resources. But the reality is these are always low income households. If they don't have disability and social security, that means they have to work and most of them have children. And if you work and have children, that means you have to have childcare. And childcare is very, very expensive. There's very few resources available for childcare, even though they do have resources available for rent, food stamps and some other things. So, while they can take their voucher and live any place they want, transportation is often times an issue. Either they don't have a car so they're using public transportation or they have undependable transportation, or just the budget of gas every week is a significant budget item in. So the reality, while they can take their voucher any place they want, they end up wanting to stay near family members so that they have some help with childcare. So those pockets of poverty, where they came from, end up going back and choosing to live in those neighborhoods because they need to live near their aunt or their grandma or near their mother, their sister, so that they can have some help.
Bob Preston:
Those are really, really good points. Amanda, how about you in your experience in Hawaii? What are you seeing?
Amanda Han:
In Hawaii we have, different people helping us, whether they're section eight, the state, or whether they're through the county, everything works a little bit differently depending on who we're working with. So there's not much consistency there. Every time we are helping the section eight tenant, we're not exactly sure how it's going to go through and that always makes it really difficult and we're professional property managers, right? So a lot, our biggest competition here in Hawaii, is actually the mom and pop owners who are managing properties themselves. And it's like, if we can't figure out how to work with section eight program, how are they going to figure it out? So it's very daunting for most people.
So, we do work with section eight as a company, and we have no issues usually with our tenants at all. It's really that arduous process of just getting that tenant into the property. Even if we have a owner who's willing to accept section eight, or any other housing voucher, if we have several applications that come in and if they're all equally good, we're probably going to go with a tenant who can move in right away. With Section eight we have to schedule a inspection that might take a few weeks, and by the time the tenant moves in, it might be a month from now. And the owner can't afford a month. If we have an application for someone who can move in next week, we're going to go with them. So that's the pain point.
Bob Preston:
That was one of my questions I had for the group. I know in California, and I'm assuming this is trueall over the country, the rental rates are all going up. So the cost or the price of rent is up, up, up. The demand is also sky high. We put a property on the market and within an hour, we already have 20 inquiries and sometimes people are just applying before even viewing the property. I mean, it's crazy here in California. So the question to the group, are you seeing issues with section eight and this program keeping up with the real estate and rental market? Landlords want to get someone in right away because they've got all these applicants. They can't wait around and so maybe that area needs to be reformed. What's your experience?
Amanda Han:
Definitely when they talk about prices going up, that's one of the problems that we run into with section eight. We have a price listed for the rental and the applicant might come in thinking my voucher will cover it. We might actually go through the whole process of accepting this application and get to the very end and section eight says, oh, we're not going to pay that much. We're only going to pay this much, you know, so they're not keeping up necessarily with the rental markets or understanding that there's a huge demand for rentals.
Bob Preston:
This must put a big burden on you guys to make those decisions and is challenging to then keep up with. Patti, how about you, are you seeing the same things?
Patti Robertson:
If I could piggyback on what Amanda said, one of the trends we're seeing in our market as well is that prices are significantly going up in the regular rental market. So if a tenant right now is paying $1,400 a month and they have to move, that same $1,400 is not going to buy them the same type of property that they are in right now, because that property is going to be running for probably $1,700 a month. So it's a real shocker. The other trend we're seeing is that the housing authorities, in our area at least, are experiencing the same kind of staffing shortages that all businesses are. And to address that the trend, they're now outsourcing the rent reasonableness test, which is the part of the process and the approval process where they determine if the rent the landlord is asking is reasonable compared to non-section eight rental houses, properties that have rented that are similar to this property. And in my office, we always submit rent comps to justify our price. You know , we've submitted great comps close to the location, similar in age, similar in style, similar in size. We always met the reasonableness test because we ask reasonable rents. Now they're jobbing those out to these third-party companies. Nobody in the housing authorities are even looking at them, the trend is they are sending them out to a company that's doing those valuations and the valuations are coming in ridiculously low. It's like having a house sale appraisal dependent on Zillow.
Bob Preston:
I was going to say kind of like an appraiser coming in, right?
Patti Robertson:
Well, but an appraiser puts real eyeballs on theproperties . And our housing authority used to do that. Maybe not necessarily on the properties, but at least on the local comps. And we had the ability to submit comps and they regularly looked at them. It takes a human being to really look at that data. And so the result is just like Amanda said, our values are coming in really, really low. And so I'm obligated to, in my state to treat source of income as a protected class. So I'm obligated to offer section eight, but I am not obligated as a landlord or a property manager to accept a lower rent than I can get on the regular market if section eight comes in and denies the amount. So it's a big problem for the voucher holder because they have a limited amount of time, the vouchers expire. So they're always on a deadline. If they, if they don't find a property that is submitted with the, with the rent approved by their deadline, then they lose the right to have the voucher. They can get an extension or two, but in my market, it takes 10 days to get that rent approval. So the landlord has lost time and income. And the tenant, you know, time is critical to the tenant and valuable to the tenant as well because they, for every day that goes by that's another day closer to them being homeless. It's a tough process for the tenants. They have to give notice to their current landlord before they found a new place. So it's a stressful process for everyone. And those having those rents, being driven, the re the valuations lower than the real market is going to directly result in a lot of our voucher holders ending up homeless
Bob Preston:
From both of you, it is apparent that your intent is good. You want to participate, you accept section eight, but the reality is that the market pressures on you to fill a home quickly for your client makes filling that vacancy with a section eight tenant super challenging. From a practical standpoint, as property managers, you want to play fair, you want to participate, but in reality, it just kind of , kind of makes it difficult.
Patti Robertson:
One other rule of section eight that creates an unfair playing field for the voucher holder, is that in the world of landlording and property managers, money talks. So when we accept a tenant, our expectation is that we, that the tenant be able to sign a lease and pay the deposit immediately, or we don't take the house off the market. Well, HUD rules don't allow the voucher holder to sign a lease or pay the deposit until the property has passed inspection, which is going to take 20 to 30 days. So in Virginia, we are very fortunate that our, our residential landlord tenant law specifically addresses this issue. And it has a clause that allows us to take a reservation fee from an applicant who can't sign a lease at, which is, you know, it's almost as though it's written for section eight tenants. So in our state, we're able to take a reservation fee that replaces the need of signing the lease and paying the deposit. In a state where reservation fees are not allowed, the voucher holder would be at an absolute disadvantage.
Bob Preston:
Amanda, I see you nodding. In California, we're not allowed to take any fee except for a rent security deposit and an application fee. So these other things just aren't allowed, you can take a rental deposit as well. Amanda, what are you , what are you seeing ? Are some of these constraints affecting you and your ability to accept at times section eight as well ?
Amanda Han:
Yes, all of the above. Like landlords across the nation, we're all experiencing the same things, and we've all been saying it for a really long time. It's interesting because you know, we're still having these conversations today, like, as if it's a new conversation with our, with our current legislators, like , like here locally in Hawaii, and I'm like, there's a news article out and it's kind of like, oh, really? Like, people are willing to us actually , but it's just, the program is hard, you know, was like, yeah, like, we're trying to say that like for a long time now, it's just interesting. I think we all are going through the same pain points . So it's just a matter of, are they going to reform section eight? You know, like, are they going to make it easier? I mean, for us to like, there's so much paperwork, like actual paperwork where the tenant has to come in and we have to fill out all these forms and they need a wet signature and they have to go back to the office and make copies and all these things like, you know, can't , they make it electronic can't I can't, I go and log in and verify who I am, you know, and like, just fill everything out online, you know? So it takes seconds to process versus like days, you know, just for paperwork. I mean, I feel like there's simple things that we can just get everything up to this day and age to assist, right? Like Patty said, with a constant, we can upload our comps, you know, and someone can just look at it really quickly and say, yep , that makes sense. So it seems like there are some really common sense type of things that they could do nationwide to make this easier for landlords and, you know, just incentivize landlords, you know, so that, it's just as easy if it's just as easy to rent to a section eight person as someone not on section eight, that would just, that would do it for us. And they'll lost income, you know, that, that waiting period or in Virginia, our , our law says that we have, if we get a section eight applicant that meets all requirements, because we can't make a , make a decision solely on the voucher status, we have to wait 15 days. So if HUD, if HUD , um, we have, the landlord is obligated by our law to hold that property for 15 days. Well, right now we just had a Navy ship coming to port. So we are flooding our rentals with military right now, and they want to move yesterday, you know, when they come and look, they want it , they want to move in right away. So that is half a month's rent that the landlord has lost because we're obligated to wait on a decision from the housing authority. Right. And that doesn't make any sense less never . Right. So, you know, if we, if we got that sign on bonus, as you know, is, is suggested in the law, then the landlord would be compensated for that waiting period . And then that would make sense. Yes. That's what I was going to say too . Yeah, exactly.
Bob Preston:
I would like to add to that we're required to screen applicants the same way every single time. And so that of course includes their income, including section eight income, but also their credit score, other aspects right. Pertaining to their ability to rent the property. And what I found challenging is that oftentimes it's just hard to qualify people through our normal screening process. We are totally open to accepting section eight, but sometimes the screening process gets in our way as well. Have you two experiences ?
Patti Robertson:
I would say no, not really. In my company, we don't use credit score per se, as a criteria. We do look at credit and we are looking at threats to income. I don't really have an issue using the same criteria. Section eight has more stringent criminal requirements for compliance in their program than we, as landlords are even allowed to use. Which is a little mind boggling that HUD violates their own fair housing laws. In terms of felony status, you know, it's bizarre because you can't have a felony and have a section eight voucher, but yet we can't use felony status in making onboarding decisions with an application. But I'm still looking at threats to income. You know, if they have a delinquent account or a judgment with a furniture company, a car company, a credit card company, you know, any of those companies that I know are going to garnish wages or garnish income, and they have earned income, and this wouldn't apply if all of their income is disability or social security, because they're not garnished will. I look at that and I apply the same criteria to whether it's section eight or non section eight.
Bob Preston:
Tyler coming back to you is how to , is HUD aware of these challenges and are some of these reforms and proposals that are being put forth in response to people like us who want to participate, but are finding it challenging?
Tyler Craddock:
So 1820, which is the reform bill I was talking about, there was a lot of industry input on that and it comes directly out of the pain points, whether it's managed as single family properties like us in NARPM or our friends over at the national apartment association, folks managing in large multifamily. And of course now we have the change in administration that leads all of the policy. They want housing in some , some form of housing support to be an entitlement. And in this case, they're banking on the section eight program to provide that. And so we're going to try and fix these things. And then there's a good bipartisan understanding there. It's now just moving it along. We may have been further down the road, you know, but for that little thing called the pandemic. There's so many things that a number of us were working on. And then, you know, of course, March of 2020 happens and the world turned upside down
Bob Preston:
Patti and Amanda, I know that when I've talked to our clients, you know, at my company, North County Property Group, and I've talked to owners about section eight and about the housing voucher program, there are often some misconceptions about the program. And so I don't know if you hear this, when you talk to your property owners or even maybe among your staff. Things that I've heard are gee, we might have trouble collecting rent from the HCV tenant participants, or maybe is it going to be more challenging to increase the rent from these types of tenants, or perhaps is it more difficult to evict those tenants? I mean, those are pretty much misconceptions, but do you think that exists in the market and as property managers?
Patti Robertson:
I actually teach a class locally about your perception versus my reality of section eight. And I have a blog on my website about that. I think the biggest misconception is people always say, oh, if I have a section eight tenant, they're going to trash my house. And a third of my, the properties I manage are section eight. So the majority of my intentional landlords are buying in the lower income neighborhoods where we qualify for the section eight amount and they love the program. But you have to know the rules of the program so you can use them for your advantage. So for example, if the tenant owes a water bill or they've done, we've had a section eight inspection and they've done damage that was caused by the tenant. We bill a tenant for that damage or the water bill. And we notify the section eight caseworker that the money is outstanding and unpaid, and that puts the voucher on hold. The tenant cannot move and port to another property. The portability ends at that point, if they owe money to their current landlord, but only if the landlord or property manager notifies the housing authority. That's one of the misconceptions. They think they're not going to get paid. The reality is we do get paid on almost all of the damage that our section eight tenants do. July is a big move out month in general. And in our world , our biggest month, I had one of my best move outs ever this month. I have an owner moving back into a Virginia Beach condo that had a section eight tenant. Literally the property is better in better condition than it was when the landlord gave it to us. It's one of the best move outs we've ever done. We don't have to touch it. The owner is moving right in. He just gave me a glowing Google review. And then I have a property where we did an eviction today, that was a tenant who it was, not a tenant I placed. We inherited it. The owner brought us the tenant, hoping to do an eviction before, you know , the pandemic happened or before the moratorium happened, it was not a section eight tenant. It was a family, two income family, husband, and wife. And it was, it's absolutely one of the worst move-outs we've ever done. The house is atrocious and it's a non section eight tenant. But with a section eight tenants, an issue like that almost never happens because they're sort of semi trained in the home inspection process. They go through the process of a home inspection at least once a year. So they get trained more than the average bear on things to look for and things that put a property at risk. So if we have a leak under the sink, which I want to know about is as a property owner, I want to know about Alinka to the sink. You know, I , that's something I need to fix. A section eight tenant is way more likely to notify us of those , um, those issues than a non section eight tenant, who isn't quite as aware. So HUD has a lot of, a lot of benefits and a lot of advantages, but don't do enough volume in it , I think to learn the system and they don't talk to enough people. And there's really not a lot of education out there to teach landlords how to use those HUD rules to their advantage.
Bob Preston:
Really good points . How about you, Amanda? Do you see and hear misconceptions when it comes to section eight,
Amanda Han:
Patti, you just kind of like summarize everything so perfectly. The most common misconception that I hear when I talk to my owners about potentially renting section eight, is what happens if they trash my unit? I like to tell my owners , some of my best tenants are on section eight and they stay forever and they're really easy to work with because you know they're going to have rent. You know, and people that are looking for something long-term like long term tenants, section eight can be great for that because they might end up staying for a long time. So those other misconceptions that you were mentioning, Bob, I don't really get too much. I don't know if it's the same everywhere, but here in Hawaii, we do have to give like a 90 day notice for any changes. Traditionally we don't have to give any notice if they're coming up on a lease renewal, we just let them know a month and a half before. So it does kind of tie things up actually in terms of, you know, rental increases or things like that here. So, to me, that's not really a misconception at least here locally, but definitely the idea that tenants are going to be worse tenants or destroy property just because they're on section eight is a big misconception.
Bob Preston:
This has been a great episode. We could go on talking about this probably the rest of the day, right guys? But in the interest of time, we need to wrap up and I appreciate the comments so much. I think in summary, we can unanimously say as a group of property managers and also as members of NARPM, that we embrace and fully support the goals and purpose of the Housing Choice Voucher programl We've been calling it section eight synonymously. We also recognize our responsibilities as property managers and landlords under the program. To Tyler and the panel, any last words or thoughts for the audience?
Amanda Han:
Just keep the conversation going, you know, reach out to your legislators or your local HUD officials and hopefully little by little, we can support positive changes and reform for section eight, just to make it easier for us to be able to work with them. I mean, that would be the best thing for everybody.
Patti Robertson: 31:00
Let our legislators understand that by extending the moratorium, it is decreasing the number of properties that are available for our worthy section eight voucher holders. There are no properties for them right now because many properties are occupied with non-paying tenants under eviction protection. Voucher holders are not those folks, they're paying tenants. And it would be nice to free up some of these properties.
Bob Preston:
I'd like to throw in my 2 cents here to educate yourself on the program. If you're a landlord or a property manager, make sure you know about it. I think we've all talked about that. How there's a lot of misconceptions or maybe people aren't fully educated. I think that's a really important aspect.
Tyler Craddock:
I cannot say it any better than the three of y'all did and it's just a testament to how much of a privilege it is to be y'all's voice in Washington DC. So I think y'all just covered it wonderfully. There's there's nothing I can add to make it any better.
Bob Preston:
Tyler, Patti, Amanda, thanks so much for coming on the show today. It's been a great episode. Hopefully we'll all see each other sometime at an upcoming NARPM function or conference. As we wrap up today, I'd like to make another quick plug to our listeners to click on the subscribe button and give us a like also please pay it forward with a positive review to help encourage more great guests to come on the show and that concludes today's episode of the property management brainstorm. Thank you for joining. Until next time we will be in the field, working hard for our clients to maximize rental income and property value while maintaining top tenant relations.
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