While not all landlords will work with subsidies throughout their career, certain areas, price points and types of properties are more prone to having residents with subsidies. What are some tips and tricks to working with subsidies at your rental property?
Is the Subsidy Permanent?
Confirm if the tenant’s subsidy is permanent? Many vendors will say that this tenant has a subsidy and call it by some fancy label such as “rapid rehousing program, family stabilization grants, etc”. Ask the case worker about how long this money will be provided to the tenant. Often it can be a very short period such as 3 months to 1 year. Typically the tenants needs to start paying the full rent after that time. In my experience, many tenants will be evicted immediately after because they have no plan on how they will pay the full rent and the subsidy has done nothing to prepare them for this eventuality.
Are there Require Inspections?
Most subsidy programs have at least a move-in inspection to confirm that the unit is clean, safe and habitable. Federal programs such as Section 8 have much more comprehensive inspections that may require significant repairs to get the tenant ready. Additionally, Section 8 has yearly re-inspects using the same criteria as the move in. If a tenant rips a screen, you must replace it. This can result in higher than average maintenance expenses on your Section 8 properties as you can be doing a mini-turnover every 12 months. At the move in, you will not be getting paid any rent until the unit passes the inspection and if you fail to pass the yearly inspection in a timely manner, Section 8 will also start to abate your rent on that unit.
Does the Subsidy Provide Case Management?
Case management is a person like a social worker that is employed by the subsidy to help the tenant in many areas. Some subsidies might only help in housing, but others can get involved in counseling, drug rehab, money management, child care, and a host of other issues. Understand what this case manager is providing. Section 8 for example, really only provides money for housing-nothing more. Rely on the case workers to help you with any issues with the tenant. Some case managers and subsidies will be better than others. Some will return your call, visit the property every 2 weeks and be involved with the tenant. Others will have no idea who the tenant is and do nothing to help you as the landlord.
Where does the Money Go?
Does the subsidy pay you directly? Do they first need to collect some income from the tenant prior to paying you? Is the subsidy actually getting all the tenant’s government money such as social security or other benefits and then sending you the rent? Is the tenant responsible for paying you a portion of the rent directly? If so, will the subsidy help to keep the tenant up on paying their rent? All these are important questions so you understand how and when you are getting paid.
Tip: Get the Subsidy Managers Contact Info
Sadly, there is a high burnout rate as case managers. It is called compassion fatigue. Think about all the issues you have in your life and the consider being in a job where you could be taking on the issues of 20 more people that are unable to cope with those issues themselves. Case workers will turn over. I have seen many only last 6-12 months. It is a good idea to have a second or third contact at each organization so if you are not hearing back from the case worker, you can reach out to someone else to have your questions/problems addressed.
Sticking with Your Processes
I find that many tenants with subsidies do not follow our standard processes. They call their case worker with maintenance requests. They don’t look at the statements we send out. Sometimes they don’t have a phone or emails. Stay on your normal processes and work to get the tenant to follow them. Adding an exception to your process can lead to inefficiency and mistakes.
Hopefully these are some words of wisdom to think about the next time you take on a tenant with subsidies.