Investing in low-income housing does not need to be high risk. The Housing Choice Voucher Program (HCVP) provides low-income families, persons with disabilities, and elderly citizens the opportunity to live in safe housing.
Formerly called Section 8 investing, this type of investment is secure. Americas Housing Alliance notes that this also helps the community and serves as a source of passive income with high potentials. It’s a subsidy program that relies on local public housing agencies (PHA) for enforcement and inspections.
The houses for rent in the program are owned by private individuals, as well as nonprofit or government organizations. These may include townhouses, apartments, or single-family homes.
The U.S. Department of Housing and Urban Development (HUD) is responsible for controlling the rent. Every year, the HUD releases a list of Fair Market Rents for different areas in the country. This is the basis of the rent for section 8 housing. The PHA subsidizes the rent of the tenant, covering between 65% and 90% of the rent. The tenant pays the balance.
The subsidies are deposited every month to the account of the landlord or investor. This protects the investor from late payments. At the same time, the tenant needs to pay his share on time; otherwise, he may lose his voucher privileges.
High Housing Demand
Another safeguard for the investor is the demand for HCVP housing. The investor does not even need to advertise. The PHA generally takes care of marketing with the high number of inquiries for open HCVP properties. Due to the increasing demand, vacancies can also be easily filled. This compels tenants to keep up with their monthly rents to avoid being evicted.
Another HCVP safeguard is the PHA inspection. There are annual inspections, as well as inspections conducted prior to occupancy by new tenants. Non-compliance will disqualify the unit being rented out. The inspection results in a list of items that need to be repaired. The investor needs to fix the items on the list, which may include hot water leaks, roof leaks, and other possible hazards. The inspection allows the investors to keep up with the maintenance.
Section 8 or HCVP provides low-income earners with access to better housing. It is also a secure, low-risk investment for the landlord or investor. This is a win-win situation for the housing agencies, the investors, and the tenants.Tags: Housing, Housing Plan, Income, Investors