I was talking to Joanne Dennison, a consultant friend of mine about my business. And I starting using jargon she didn’t understand. She is a very smart person, so if my goal is to make real estate simpler and more accessible for people, this is bad, very bad. So we decided that I should create a  Resources section on my website and fill it with articles and links that would be helpful references. So this week: Section 8.

Section 8 is a Housing Choice Voucher Program administered and funded by the United States Department of Housing and Urban Development (a.k.a. “HUD”). The program provides payments of rental assistance to private landlords for individual dwelling units. In a nutshell it works like this:

The privately-owned dwelling units must first meet some minimum standards of quality in order to qualify for the program. In my experience, this minimum quality standard is not particularly high.

Qualified low-income tenants pay roughly 30% of their income to the landlord, which can be in the form of W2 (payroll) income, social security, SSI (disability benefits), pension payments, etc.

Then comes HUD’s magic fairy dust: the Department pays the difference between the 30% tenant income payment and “Fair Market Rent” which is based on the average rents and utilities of medium quality rental units of different sizes in the area.

Section 8 is clearly expensive for the taxpayers, but it works: Landlords like the quick and guaranteed payments and can often get rents not otherwise achievable in sketchy neighborhoods. Tenants are given some degree of mobility to respond to life changes and opportunities, and are left with a reasonable amount of income to live on.

Section 8 Unit for Rent