Greater Baltimore Property Management Blog

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Should I Rent to Section 8 Tenants? A Guide to the Housing Choice Voucher Program

The term “Section 8 tenants” refers to renters who qualify for the government’s Housing Choice Voucher Program.

• How do people qualify, and what exactly is this program?
  • Renters who qualify must have an extremely low income, and if they do, the program helps them afford local housing by paying for 33%-75% of the rent. Some people in this program are elderly, some are disabled, and some simply have little or no income.

Landlords are divided on whether they should or must rent to Section 8 tenants, and for good reason. The laws vary state to state, and even county to county.

The Fair Housing Act (FHA), a federal law, doesn’t prohibit landlords from discriminating based on Section 8. However, some states, counties, and municipalities do, often by prohibiting discrimination based on “source of income” or “public assistance status” – considering them a “protected class.”

Here’s an overview of the pros and cons.

Pros & Cons of the Section 8 Program

• Section 8 Waitlist
  • Pro: Guaranteed Rent

    • “Guaranteed Rent” – Two words that are music to a landlord’s ears. It almost sounds too good to be true.

      But, under the Section 8 program, you are guaranteed at least a portion of the rent to be paid to you by the government – the U.S. Department of Housing and Urban Development (HUD), to be exact.

      And because you’re dealing with the federal government, this could be a mixed bag. Which brings us to our first two cons...

  • Con: The Approval Process

    • As with any government agency, red tape is involved, and Section 8 is no different.

      First, you must fill out paperwork, and then your local Public Housing Authority, which operates under the Housing Choice Voucher Program, must approve your rental property.

      Then, your property must undergo an inspection, and if approved, it must continue this type of inspection annually.

      To pass, your property needs to meet acceptable health and safety codes. And whether your house is approved could depend on how stringent the inspector is in your area (meaning – you should expect to repair minor issues).
      
      Also it’s important to note, the inspection process includes inspectors that typically can make their own rules when it comes to deciding which items that needs repairs. In our experience, there is no real way to be proactive since every inspector is completely different. 

  • Con: Subject to Rent Control

    • If you are approved, the Housing Authority then reviews your lease and often restricts how much you can charge for rent. In other words, you can’t necessarily charge what you like.

      You can’t charge whatever you want.

      You generally can only charge what other properties in your area charge. So your property will be subject to a sort of appraisal process to determine rent.

      Note that sometimes, depending on the area your property is in, you might receive more rent through HUD than you would by going through the open marketplace (but I wouldn’t count on it).

      HUD then agrees to pay a certain percentage (this varies by case) of the rent. Your tenant pays the remainder, which usually amounts to 30% of their gross income.

      Generally, a tenant only pays about 30% of the rent amount.

  • Pro: Long-term Tenants

    • Many Section 8 tenants, after being approved for the program and after finding a place to rent, tend to stay put for a while.

      Moving is allowed, but Section 8 tenants need to notify the Housing Authority, give you proper notice, and find another place. In other words, it’s a hassle.

      Plus, when Section 8 tenants sign a lease, it’s generally for at least one year.

  • Con: You Hurry Up and Wait

    • It usually takes a long time to go through the Section 8 process.

      By the time you fill out the paperwork, get an inspector to come out, make necessary repairs if required, get the inspector to come out again to check your repairs, get a tenant in, and then receive rent, you might have been able to rent the place to someone else sooner. Meanwhile, you’re receiving no income.

      The vacancy caused by delays due to red tape usually outweighs any benefit of the program.

Section 8 tenants have a bad reputation. And just like any stereotype, there could be some truth to it, but every case is different.

People complain that Section 8 tenants are masters at manipulating the system, and many landlords are left holding the bag.

As with all tenants, there are so many things that can go wrong. For example:

• They lose their voucher, and then won’t leave,
• They destroyed your property, and the housing authority won’t compensate you,
• They moved extra people in despite that being against the rules.
• They become a nuisance to their neighbors.
• They may be guilty of other lease violations.

Some people, whether they are temporarily down on their luck, are disabled, or live on a fixed income, might not be able to afford housing without some help, but they could make wonderful tenants.

The key is for you to run a background check and credit report, and to call prior landlords. Do your due diligence before accepting any tenant.

• But just as there are horror stories with Section 8 tenants, there are good experiences too.

Even with properly vetting tenants, there is still no guarantee that nothing will go wrong when dealing with people. The best offense is to protect your investment by working with a reputable management company as well as purchasing additional insurance for yourself.

Some Municipalities Require Participation

Some municipalities require landlords to accept Section 8 tenants, meaning that whether you want to deal with a government agency or not, you have to, even though this should be the landlord’s decision.

For example, if a Section 8 tenant fills out a rental application in a municipality that requires landlords to accept it, and if that applicant passes your screening process, you need to start the ball rolling to have your property approved… unless you rent it to another qualified applicant first. (After all, the government is not known for moving fast.)

Even California and the city of Chicago protect people in the program; however, many states like Colorado allow a landlord to “opt-in,” rather than being required to participate.

Note that you don’t have to accept an applicant just because they have a Section 8 voucher. In jurisdictions that require you to take Section 8 tenants, you are encouraged to screen them as you would anyone else.

You need to contact your local or state fair housing agency to determine what the law is in your jurisdiction.

Pros and Cons of a Home Warranty for Rental Property

A home warranty offers several advantages; but, they also have some disadvantages too. 

Pros of a Rental Property Home Warranty

They provide flat rates for repair which can save money. They bring good selling points in getting prospective tenants. They contract with the best local contractors to make repairs. The cost of a rental property home warranty and service calls are tax-deductible.

Cons of a Rental Property Home Warranty

They don't have a real sense of urgency and if the repair is considered an emergency, a delay from the appliance company can cost you a good tenant, or worse liability issues resulting in legal action. They spend as little time and money on your home as possible, so they may choose to repair problems instead of replacing damaged items such as air conditioners and electrical systems. Since repairs do not always last as long as replacements, you could face more expenses soon. Some items may not be covered by the warranty without an additional policy upgrade cost. They usually spend a lot of time to get a simple repair done and if you need to make a claim, the process can be time-consuming too.

A home warranty can be a helpful tool for those who want added protection against the cost of repairing or replacing certain home appliances and systems. However, before deciding whether a home warranty is the best option for you, it is essential to carefully consider its costs, coverage, and restrictions. There are numerous drawbacks to purchasing a home guarantee. 

Twelve Proactive Resolutions For Investors

12 resolutions to ensure the success of any investment, at any time of year.

1. Review your property insurance annually. 
   • While it is critical to keep insurance up-to-date, you must also keep up with the numerous changes that impact it. Nobody wants to discover that their insurance has expired or is insufficient.
2. Organize tax information on investments.
   • Begin preparing investment records for your tax accountant as soon as possible to avoid overlooking any vital deductions.
3. Review your ROI.
   • Make time to review your return on investment (ROI) for each property once a year. Knowing your income and expenses might help you plan for numerous other resolutions discussed in this article, such as a maintenance plan or even purchasing a new investment.
4. Consider precautionary measures.
   • It is not realistic to believe that your investment property will not require repairs. Preventative maintenance can help you avoid expensive and unnecessary major repairs.  Make a budget for routine repairs while creating your annual budget. During the holidays, no one wants that emergency maintenance call.
5. Make long-term maintenance plans.
   • Rental property usually considered as a long-term investment. Roofs will age, carpets will deteriorate, water heaters may fail, and so on. Creating a budget for major costs will help if they occur or if an unexpected emergency occurs.
6. Examine your investment portfolio.
   • Perhaps this is the time to think about selling your home and investing in another. It could also be an excellent moment to add a new property to your portfolio. Contact us for a realistic rental value for any property you are considering purchasing.
7. Review current tenancy.
   • Check your Owner's Portal regularly for any updates from us. It's possible that a lease renewal is on the horizon, and you'll need to encourage a tenant to stay. It may also be time to serve a tenant with a notice. Knowing what is going on in your property is preferable than being taken by surprise.
8. Keep up with legislation.
   • When it comes to investment property, there is always something occurring in the courts, such as bedbugs, hoarding, mold, and so on. We will try to make every effort  to keep you informed of any major developments that may have an impact on you. This email newsletter is being sent to you because we want to keep you updated. It is critical that you stay current on legislation that may affect your property.
9. Always adhere to Fair Housing.
   • Fair Housing impacts many aspects of investment property, including advertising, showings, applications, and renting. Investors who violate Fair Housing laws and regulations may face severe penalties. Following Fair Housing regulations is critical to a successful investment.
10. Never, ever retaliate.
    • Unfortunately, tenants can be incredibly annoying and difficult. A property owner may become enraged as a result of this. However, it is critical that the court not interpret any action taken by a property owner as retribution. This is a sure way to lose in court. Before taking any action, consult with us to avoid triggering a legal problem or incurring financial harm.
11. Utilize risk management techniques.
    • All of the prior resolutions are self-evident. They are also techniques to exercise risk management and protect your investment, if you think about it. When you use this approach, you boost your chances of making a highly profitable investment.
12. Be a part of the team
    • It is essential for property owners and property management companies to work together as a "team." We fight to preserve your investment, and we are more successful when you consider us an integral member of the team. Please let us know if you have any questions or issues, and we will gladly assist you.

Turnover Management Process 

Avoiding Court and Other Liabilities by Being Safe

A plan for minimizing property owners' liability and adhering to building guidelines is to provide tenants with safety. A residence needs to have a safe environment on both the inside and outside of the building.

A significant key for decreasing liability is to "think preventative." Repair costs can be reduced or avoided by paying for maintenance. Courts have a negative view of property owners who do not pay attention to dangerous maintenance. It might also be beneficial to encourage tenants to stay with the tenancy. If a tenant's home is safe and comfortable, they are less likely to move. This reduces rental income loss.

Interior Safety

1. Fix flooring problems such as exposed carpet tacks, loose tiles, ripped linoleum, and stretching carpeting when necessary.

2. Replace any flooring when it becomes a trip hazard as soon as possible.

3. Repair any unsafe electrical problems, such as broken receptacles, unsafe wiring, or faulty stove/oven and dishwasher units immediately.

4. Maintain or replace smoke alarms so that they work properly in the event of a fire.

5. Install carbon dioxide detectors on the property. This is a relatively inexpensive item to promote tenant safety and is now required by law.

6. Provide and install a fire extinguisher. This may also reduce your property insurance rates.

7. Replace or fix window locks, ensuring that the tenant can easily open all moving windows to provide escape routes in the event of a fire or to prevent burglary.

8. If neighborhood problems require bars on windows and doors, install the type easily opened from all moving windows and doors. Then, to be on the safe side, have the fire department check them.

9. Installing double-cylinder deadbolts with thumb throws is a big safety item.

10. Replace inside keyed deadbolts. These can trap a tenant if a fire occurs and the key is missing.

11. Remove or fix any problem that could promote mold problems, such as leaking or dripping faucets, broken bathroom fans, etc. If necessary, have the property evaluated by an experienced mold expert. This is one of the highest liability areas for landlords today.

12. Always have asbestos or lead-based paint removed properly. This is mandated federal law and the fines are huge if there are violations.

Exterior Safety Issues

1. Install proper lighting around the property to help deter or expose waiting for predators of all kinds.

2. Keep bushes and trees trimmed to not only assist with exterior lighting but also avoid areas where tenants can trip and injure themselves.

3. Removing large tree branches can also prevent damage to roofs, people, and tenant vehicles.

4. Repair large cracks that cause uneven sidewalks and driveways - another trip hazard.

5. Remove dangerous tree roots - this can cause large cracks in sidewalks and driveways.

6. Have hanging wiring, falling gutters, and falling roof tiles, removed immediately.

7. Remove high grasses or debris that could promote fire danger.

8. Repair, replace, or take out unsafe patio covers, sheds, fences, or structures that could cause a hazard.

9. Repair or remove dangerous potholes, rocks, or toxic waste.

10. Fix the source of any standing water. This not only eliminates potential pest problems but can also reduce water bills.

11. If there is a pool or spa, be sure there is proper maintenance of the water and that it complies with all safety codes.

All About Property Inspections

Each year from April to September, PropertyWize conducts an annual property wellness checkup walk-through visual inspection for each unit/property. Our goal is to check all the safety items, e.g. Smoke Alarms and Carbon-monoxide detectors, and be proactive with the preventive maintenance items, as well as update the inventory checklist on file for each unit. For example, the locations of the water main shutoff valve, electric panel, water heater, furnace filter sizes, etc. We also check for any emergency items that can cause a liability issue.

For doing the prompt inspection we use a happy inspector, it is quite helpful as you can view inspection results as they’re collected, Speed inspections with forms that automatically match the layout of each unit, and identify the correct number of bedrooms and bathrooms. We can attach up to 16 high-resolution photos to each inspection item for objective proof and maximum clarity. We can add comments or note to each item inspected, and store frequently-used comments in our SnapText library for easy access and we can capture item brands, colors, finishes, and unique conditions. They allow inspectors to assess how conditions measure up to standards, so we can benchmark performance and accurately estimate costs. It help us to minimize damage disputes with move-out reports that provide your residents with transparency into item conditions.

Rental Owner Statement

Some tips when running the rental owner statement:

- Check the property beginning balance. At times, changes to past transactions can affect the owner’s running available for payment balance. Running a rental owner statement with a prior start date will help you find discrepancies.
- Run the rental owner statement including the transaction details. Seeing more a more detailed view can also help to find discrepancies or missing transactions.

If you are relying on the dashboard, it doesn’t show any reserves which are very important in calculating your net pay. The effectiveness of the dashboard is to show a glance of your income and expenses but it doesn’t show you the full picture. Our clients use it mostly to click through the blue hyperlinks and
download invoices and receipts.

The dashboard by default uses calendar month, but we define the fiscal month as ends on the 10th of each month for accounting purposes. The dashboard is default by the software, you may select "Custom" in the pull-down menu for "Date range", then you will be able to select the "start date" and "end date" matching our fiscal month cycles.

If this net amount is not matching, we recommend running the rental owner statement report to troubleshoot. The rental owner statement will show you all the transactions affecting the owner’s available cash. It is a great place to find missing or incorrect transactions on the owner’s properties.

Lease Violations Overview

Our best practice when a lease violation comes up is to handle it right away, send proper documentation for record keeping, keep emotions out of it, and follow up in a timely manner.

If we have a tenant that is violating their lease, we have an obligation to enforce the lease agreement. Remember, we are running a business. Our goal is to protect your asset, and part of protecting your asset is enforcing the lease agreement.

Step 1- Serve the tenant with proper notification. Sometimes, the tenants may not know they are violating the lease agreement. Have something in writing, notifying them of the violation and a time frame in which to have the violation resolved.

Step 2- Here at PropertyWize Property Management, beyond serving a notice, we always consult our attorneys before taking any legal action towards a tenant as each case and circumstances are different.

Step 3- Speak to the tenant to go over the details of the violation and inform them of the next steps.

Step 4- Schedule an inspection if deemed necessary to confirm tenant is now in compliance.

Step 5- Follow up and if no improvement, the next step would be to issue a breach of lease or non-renewal of lease depending on the circumstances.

New Rule from City Sheriff Office

This is to inform you that in Dec 2022, the newly elected Baltimore City Sheriff has implemented a new rule regarding posting Failure to Pay Rent (FTPR) and Eviction notices in common areas of Multi-Family Dwellings (MFD). 

The deputy sheriff now must post FTPR and Eviction court notices on the tenant's unit door; they can no longer post to a building's exterior door that has multiple units. The sheriff department stated that posting in the common areas is "inhuman".

Because of this new rule, we strongly recommend all Baltimore City MFD owners to invest in installing a keypad door lock that can be unlocked by pressing a code, so the deputy can have easy access to post FTPR Notice on the tenant's door.

The Sheriff's Office also said they will not access a lock box or remove a property key from a lock box because they do not want to be held responsible for missing keys. 

With this new rule regarding posting Rent Court Notices, please contact us if you would like us to install keypad locks on your MFD 's exterior door before the next FTP Rent Notice has to be filed.

Unpaid Rental Owner Balance

Please be advised that we are sending an email whenever an owner has a balance on the account for more than $1000 every month. You need to make sure that the account is positive to avoid being charged $50.00 + 1% of the money owed from the previous month. We are making the audit every 10th of the month and we are sending notifications via email and mail.

In order to pay for the balance, you may send an owner contribution through the portal.

Maintenance Workflow

When a maintenance request is received, the agent first checks the severity of the ticket, then sends an auto-approve notification to the owner if it is an emergency. 

If the maintenance request is not under emergency severity, then check if the tenant is delinquent or not and the agent cancels the ticket if the tenant is delinquent. 

If the tenant is not delinquent, the agent checks if the property is under a home warranty or not, then reaches out to the home warranty. 

If the property is not under a home warranty we check If the owner handles the repair, and if not, the agent moves forward with checking if the ticket has any vendor warranty like waterproofing, roofs, HVAC, carpet, etc. If the ticket is not under vendor warranty, the agent proceeds with standard dispatch.

Maintenance Program

Maintenance costs can make or break the owner's bottom line, our maintenance program is created to maintain the owner's investment value with decreased liability and high turnover due to deferred maintenance.

All incoming work orders will be sent to the owners first, this means the owner/s have 36 hours to respond to non-emergency tickets. You will be set up with Latchel - our dispatching company and through Latchel, any work orders will be brought up to your attention via SMS and/or email first before reaching our team for processing.

Read more about our Maintenance Program here.

Eviction Trends

Maryland evictions drastically increased during the summer months, moving closer to pre-pandemic levels. Evictions in the third quarter of 2022 were about 30% lower than during the same period in 2019, but about two and three times higher than during the third quarter in 2021 and 2020, respectively.

For almost 3 years, thousands of evictions were prevented across Maryland by a combination of federal and local eviction moratoriums put in place during the pandemic, federal rental assistance funds, and court backlogs.

The number of successful evictions we had have tripled in the 1st quarter of 2023 compared to the 3rd and 4th quarter of 2022. Right now we are noticing a huge improvement on delinquency management.

New High Water Bill Alert SOP

We know how frustrating the water bill processing can be especially now that water bills can no longer be considered as additional rent, therefore if a tenant refuses to pay, the only legal solution is to take action by going to Small Claims Court. We can not evict a tenant for just unpaid water bills only unpaid Rent. Please see our correspondence (Important Changes Regarding Water Bill Collection… Reference: Lockett v. Blue Ocean Bristo) about that law that passed for more information. While not perfect in our operations, we are committed to improving our procedures and figuring out a way to help you our trustee client meet your financial goals.                       

We just discovered the DPW Portal for Baltimore City Properties has created a water bill consumption tracker which allows you to see daily water consumption, so there are no surprises when the bill arrives.

We have created a special department that is dedicated to check for any spikes and we have started what we call a High Water Bill Alert- SOP. Please note some of these features are only available in Baltimore City currently but as soon as other jurisdictions enable this we will automatically be checking consumption as well. Also it’s important to not we are only able to offer this service to properties where we are doing Full Service Water Bill Processing on our clients behalf. This includes the bill is coming to our office, we are charging the tenant, and paying the bill each month using our very advanced Water Bill Processing. This cost is $5.00 per unit per month. To sign up for this service, feel free to make the request via your Rental Owner Portal. 

-We will alert the owner of the increase of 30% in water bill consumption compared to previous months.
- Owner will be asked for approval to have a maintenance guy out in order to check for possible leaks
- Maintenance will dispatch our preferred vendor to check the property and send report to the owner
- Once confirmed that there is a leak and they were able to fix, finance coordinator will send the report
to DPW to dispute the water bill charged.

PLEASE NOTE:
- Disputes / credit from DPW is not always guaranteed, but once approved, it will be deducted on
the bill.
- Water bills are processed normally to both owners and tenants. We will also be requesting
approval from the owner if they want to pay for the bill before we proceed.

Snow Removal Policy and Cost

Winter is upon us again! City and County housing codes require snow accumulation to be removed by the specific days after snow stops.

If any of the rental properties are vacant or is a multi-family dwelling, it is the owner's responsibility to clear the snow. Some owners may want to take care of the snow removal even for their occupied single-family homes to reduce liabilities.

The regular cost is about $75 to $150 per property for a typical townhome (front public sidewalk and the path to the main entrance). Extra salt as needed. Keep in mind, the cost will be adjusted if there is icy condition and heavy snow accumulations.

Thank You and Happy New Year!

Your support, your presence, your feedbacks—all of this keeps our business alive and makes our line of work a pleasure each day.

Thank you for playing such a pivotal role in our growth.

We look forward to another great year with you!

Winter Checkup

As cold weather is approaching, there are chances of interior or exterior pipes getting frozen, to avoid freezing the following precautions need to be done. We do alert tenants to complete the following to work together to avoid any property damage from the cold winter weather.

1. Turn OFF all interior water valves to exterior faucets. OPEN exterior faucets (leave them open). Detach and drain hoses.

2. During very low temperatures, increase warm air circulation by opening interior doors and cabinet doors under the sinks, especially when water lines are next to exterior walls.

3. In the event of a burst water line, immediately TURN OFF the interior main water valve and report the problem to property management.

4. Keep air returns clean and adjust air registers for the best possible balance of warm air circulation to all areas of the house. If your house has a damper on the furnace duct, change the setting from “Summer” to “Winter” (there will be a written indication on the ductwork).

5. Change furnace filters every month or two to ensure proper performance of the heating and air conditioning systems, which reduces operating costs.

6. In the event of power failure, immediately report the problem to your power company.

7. In the event of a heating system failure, immediately report the problem to Property Management.

8. In the event of a power or heating system failure of an extended duration, allow interior faucets to drip slightly to reduce the possibility of frozen water lines.

9. In the event, you will be gone for an extended period of time, maintain the house temperature above 55 degrees F. Have a friend or neighbor check your home during your absence to ensure the heating system is functioning. 

10. Keep storm doors, storm windows, and garage doors closed if applicable.

11. If you are responsible for landscaping, trimming all shrubs, raking all leaves, and cleaning gutters; the best time for all these items is after the Thanksgiving holiday.

12. BGE also has a Program called Quick Home Energy Check-up, if you have not previously participated here is the link to request an appointment: http://bgesmartenergy.com/residential/request-appointment. Also there for low-income families, there is a weatherization program to assist your households in lowering their energy costs by increasing the energy efficiency of your homes.