By Alice Dunn | Bricksave
August 01, 2024
News > Blog Article > Understanding Housing Choice Vouchers, or Section …
For years now, Bricksave has found significant success investing in properties rented by recipients of Housing Choice Vouchers (HCV), or Section 8 tenants, as they will be referred to throughout this article for simplicity. In May 2024, a remarkable 49% of our occupied units were rented by Section 8 tenants, and 57% of our rental income for the month came from this program. But what exactly is the Section 8 program?
Don't miss out on Section 8 returns. Start investing today, from USD 1000.
Section 8, part of the Housing Act of 1937, provided affordable housing to low-income families across the United States by covering up to 100% of their rent. The Section 8 program was retired and substituted by Housing Choice Vouchers, but the processes are similar: families that qualify receive vouchers, which can be used to rent any eligible property with governmental support. This allows families to choose a housing unit that meets their needs while landlords are assured fair market rent prices. Properties in the program must comply with specific evaluation criteria for each division to ensure quality standards are met. These are as rigorous as ensuring window, wall, ceiling and floor quality, good functioning of smoke detectors and other safety measures and things such as paint quality and production materials. The property has to be in very good condition before a tenant is allowed to move in.
For investors:
For tenants:
For communities:
For landlords/investors:
For tenants:
It is important to keep in mind that Bricksave investors bypass most of these challenges, as we take care of property administration on your behalf, handling everything from the purchase, insurance and maintenance of the property (including the reserve, or the property’s very own “savings” that cover maintenance issues), to attracting and managing tenants throughout the whole investment cycle and theultimate sale of the property. All investors need to do is watch their money grow and reinvest their funds when the right opportunity arises.
The answer to this question is dependent on many factors, all of them tied to the tenant. The US Government covers between 20% and 100% of the tenants’ rent, and the exact amount is defined by the tenants’ life circumstances. These include, but are not limited to: employment status, monthly income, family size and tenant conduct.
This amount goes directly to the landlord/investor’s bank account, and the remainder must be paid by the tenant, who has these amounts clearly stipulated when they sign their lease. This means that the tenants are still required to pay their share of the rent, which will not be covered by the HCV program should it be missed.
The yearly reviews might also significantly reduce the amount paid by the HCV program, which can, at times, catch the tenant by surprise. Many are not able to take the financial hit and end up getting evicted from the property over continued missed payments.
Some tenants might also lose their HCV entirely for not conducting themselves properly (e.g. failing to pay their share of the rent, not taking care of the house). This would make them liable to pay the full amount of the rent overnight, which would inevitably lead to payments being missed, eviction and, subsequently, the unit being vacant.
Join us to earn rental returns in USD while helping others.
Investing in Housing Choice Voucher/Section 8 properties offers both social and financial benefits. It provides affordable housing to families in need, creating healthier, wealthier, and safer communities. For investors, this can mean more rent stability, higher returns, and improved chances of property appreciation. From the perspective of a real estate crowdfunding investor, Section 8 presents a highly attractive option where the benefits outweigh the challenges for everyone involved.
Investing carries risks, including loss of capital and illiquidity. Please read our Risk Warning before investing.
