HELP! Should I Take $ Under The Table From Sec8 Tenant?

The tenant is a single mom with 3 young kids. She seems to be a very nice and responsible girl. The rent I was asking for is $1300 but section 8 has only agreed to pay $1105 total for rent or 1438 including utilities. I really would like to rent to her, but its already taken about 2 weeks to deal with all the sec8 red tape and I don't really want to risk marketing this property for another month just to find a worse type of tenant... or worse not get one in for another month.

what should I do?

I think she would be willing to pay the difference under the table if I asked.

Can she aske to be re-evaluated for a larger allowance from sec8 since she is nearing the end of her vocher? Is it worth the wait?

Any advice would be greatly appreciated!

thanks so much for the help...

- JP

Hello
Here in Pa. its stated right in the landlord agreement youve signed with the Hud that to do that is against the law. Second Hud is a pain in the butt but they do have a highly complex formula for figureing out what the tenant can afford to pay anything over that is a risk to you.

ie: Tenant refuses to pay after a couple of months what are you going to do complain to Hud?

Huds financial determination is final thier is no negotiating unless tenants income changes.

Hope this helps
Ed

JP,

Most likely, $1145 is the maximum that section 8 will allow for your class of dwelling. You can check on this with the Housing Authority that is administering section 8 in your area. If this is the case, she won't be able to get more... unless there is an increase in the section 8 allowance. The HUD budget was reduced to generate money for Homeland Security. In my area the maximum allowances were reduced, however, I have heard a rumor that they may be going up again.

Taking additional money from your tenant is not a good idea. It violates your contract with section 8 and also hers.

Regards,
Ed

Call, anonymously, the housing authority, or whoever is administering the program in your area and ask if you are allowed to take extra rent payment. Some situations allow you to do so.
If the tenant is working, income is included in the calculations, and the voucher MAY be calculated on the basis of some level of tenant contribution to rent.

[addsig]

Thanks everyone,

the thing is even with just getting 1100 I'll only be about $100 below what I'm paying for the mortgage so I may end up going with this tenant anyway. I know I have no recourse if she pays me late but I figure something is better than nothing... right? Or is it not worth the risk?

thanks

I would call first and ask about it. If it's against the rules, it would probably be considered fraud and you could be prosecuted if they found out (if it's against the rules ???) Personally, I don't think it's worth the risk.

All of my Section 8 tenants pay a portion of the rent and Section 8 authorities know this. They pay a percentage determined by the market rent, the tenants financial situation and probably other factors, and the tenant pays the balance.

What does HUD say? If it is against the rules/law, don't do it. Simple as that...

Norrist is absolutely right. Section 8 should tell you if they agree that you are paying the appropriate rent. They also tell you how much of the agreed upon rent they are going to pay and what the tenant will pay (if any). But you should NOT take $ under the table. If you do and Section 8 finds out, that will be the last time you can rent to one of their tenants.

We have about 50% Section 8, and we always tell Section 8 upfront how much the rent is. Sometimes they will come back and barter and try to get us to come down. If we refuse to lower the rent, then their tenant cannot rent from us. But if we agree to a price, then they tell us how much they are going to pay and how much the tenant can afford to pay (again, if any).

Keep in mind that Section 8 has done a thorough analysis of what the tenant can afford so you would end up chasing the under-the-table rent anyway.

Hope this helps
.

Hello,

I couldnt help but to reply... here in florida my daughter works for the housing authority and extensively with section 8... if this tenant can afford to pay you under the table she is not being truthful with her income to the housing authority. If she is found out she will loose her voucher and best believe she will not lie to keep you out of trouble, you will therefore loose you option to rent to section 8. I suggest you rent to someone else for what you need to cover your mortage or agree to pay the utilites which will bring you up to 1400 and soemthing if I understood your post correctly. Best of luck to you

My section 8 tenants pay the rest of the rent that the HUD voucher doesn't pay. I don't know what the problem is here - if the tenant wants to pay the extra amount, then there shouldn't be a problem with this. OF COURSE get approval with the section 8 office. My section office wrote that the tenant pays x amount of $$ over what HUD pays...

Good Luck! [addsig]

My section 8 tenants pay the rest of the rent that the HUD voucher doesn't pay. I don't know what the problem is here - if the tenant wants to pay the extra amount, then there shouldn't be a problem with this. OF COURSE get approval with the section 8 office. My section office wrote that the tenant pays x amount of $$ over what HUD pays...

Good Luck! [addsig]

Here, Section 8 sets the overall amount of the rent, of which the Housing Authority pays a portion, and the renter pays a portion, depending on the renter's income level. The renter isn't allowed to pay any extra, beyond what is required by the Housing Authority for them to pay. To accept anything more "under the table" is an extremely bad idea. Heck, the Housing Authority's already requiring them to pay like 30% of their net income, and more and they can't afford to live, as it is...

Me personely I wouldnt take the chance of giving up a garanteed monthly rent check for a year by making the mistke of commiting fraud against the federal govt.


twice
Ed

Just the fact you said "under the table" implies not letting all parties involved in a real estate transaction, buying, selling or LEASING know all the material facts. It is a crime period. Misrepresentation and fraud have put many investors and REALTORS in deep trouble with the law. Money not reported breaks HUDs rules and also the IRS laws not to mention state laws. If you must eat it you have an alligator and for that you either have to make lemonade or get some other profit idea. Try working with theopen market instaed of section 8 or take the price with utilities and provide what you must till time for tenant to leave. Being aboveboard is foremost in real estate deals.

Here's my experience with getting money under the table.
I have a really close friend who was doing this. The renter's friend told the renter that doing this was illegal and that he should complain to housing so they would lower the rent by eliminating the under the table expense for the renter. So the renter did just that and had my friend taken to court.
My friend was SO pissed at court but he couldn't do anything even though he had a written contract becuase it is illegal.
My friend was ordered to backpay all of the charges and was fined an additional $500. The only satisfaction he got out of it was that the renter lost his housing so a lose lose for both sides.

I have a question about sect 8. Can we increase rent and how we do it ?

Thank you,

"Just the fact you said "under the table" implies not letting all parties involved in a real estate transaction, buying, selling or LEASING know all the material facts. It is a crime period. "

Amen to that.

We go round and round and round on tenant rent payments.
Some tenants must contribute.
Some can not.
It is determined by a HUD worksheet.
No Section 8 tenant can pay more than 30% of adjusted income to rent.
From the HUD website:
"How much rent do vouchers cover?
The PHA pays the owner the difference between 30 percent of adjusted family income and a PHA determined payment standard or the gross rent for the unit, whichever is lower. The family may choose a unit with a higher rent than the payment standard and pay the owner the difference."
So many tenants can certainly, and legitimately, pay rent to you above the voucher.
But that difference will be limited to 30% of the tenant's income.

Unreported income is a HUGE issue in the Section 8 program.
If the tenant has NO source of income, HUD calculations will indicate that the tenant cannot contribute. Taking "under the table" money may expose you to charges of helping to hide undisclosed tenant income. That can get ugly for landlord and tenant. Typically the tenant will lose the voucher.
And the LL may well get a good spanking.

More from HUD:
http://www.hud.gov/offices/pih/programs/hcv/tenant.cfm

Your local Housing Authority that administers the Section 8 voucher program can give you specific local answers and specific answers for specific voucher holders.
[addsig]