Last year I got called out to quote a complete clean out of a two-family home in Rahway, NJ where a lady had lived for 67 years prior to moving to a nursing home in Lewes, DE.
I ended up buying the two-family, fixing it up and then rented it out. Although my original intention was to fix it and flip it, I decided to hold on to it because it was in such a great location and easy to rent out and a fantastic investment and a "cash cow" to say the least.
Tenant applicants were "beating down the door" to get in, so nevertheless I had my choice to pick and choose for the really good tenants, which fortunately have been in there since last September.
They pay their rent perfectly every month by the first, thank G_D, and are a pleasure to deal with.
I had previously been a landlord and a professional property manager when I lived in Southern California and had many good and many bad experiences. I really didn't think I wanted to do it again, but it has worked out for the best as the house produces a fair amount of positive cash flow and is an excellent tax write-off.
Now that I have given you the background of my actions, let's get to the headline!
One of the tenants that I have is on Section 8. If you are not familiar with this term, it is a federal program that is State run by New Jersey Dept. of Community Affairs, that helps people pay their rent that are in need. Now this does not mean they are on Welfare, but it could be someone that has a job, that has children and just can't afford to pay all or part of their monthly living expenses. Personally, I am not going to make any judgment calls on whether I think it is a good thing or bad, but it is funded by our tax dollars to assist the needy.
I had never had any prior experience with Section 8 Housing or the Community Affairs department until I was requested by the tenant applicant to become an approved Section 8 housing provider.
Me being a Real Estate Broker and because I liked her as an applicant and am always interested in furthering my education and experience, I told her I would apply to the Dept. of Community Affairs in Plainfield, NJ on her behalf in order to get one of my apartments approved for her to be able to rent it.
Well it has been quite an experience to say the least! Both good and bad.
I will tell you the good part first...
The state of New Jersey sends you a partial rent payment in the tenants behalf by the first of every month. This is good because you are pretty much guaranteed a large portion of the rental income...as long as you are in compliance with the state agency.
Typically the tenant also is motivated to send the rent on time as they can be removed from the program if they violate the rules of it.
Second good thing: You are providing housing for those in need that would not normally be able to afford to live in their own private residence with their family. That gives you a good feeling inside and helps you to know that you are giving back to the community. (Because of the additional headaches of the Section 8 rules and requirements) Section 8 also sets the maximum rental amount based on area and bedroom count, so you also might be extending a discount to the tenant in order for them to qualify for the amount of rent allowed.
Now for the bad issues. I am not going to say that they outweigh the good issues...but my purpose here is to educate those who are considering providing Section 8 housing. (And also to blow off some steam!)
The Apartment or home has to be inspected by an agent of the N.J. Dept of Housing and has to be approved for you to become a Section 8 landlord. Now their requirements are much different than the city requirement necessary to receive a certificate of occupancy in order to rent out our live in a home to a mainstream tenant. I passed my Rahway C/O and the city was a pleasure to deal with, partially because I had completely cleaned out and painted and repaired and installed the necessary GFI outlets and the other requirements; smoke detectors, fire extinguishers, working windows, clean and sanitary, working appliances, etc... and had done most items in advance that I knew from prior experience might have been considered C/O violations.
Now when the inspector came from the N.J. Dept. of Housing, it was a completely new game with a whole new rule book! I thought I was done before he came and then I had to start all over.
Some of their requirements are that there has to be one window with a screen in each of the bedrooms, kitchen and all other rooms have to have one window with screens each. OK, normally I would understand this, but the apartment has Central Air-Conditioning and all of the windows are from 1910.
Fortunately they let you go to Home Depot and install a universal screen in the window, and I was able to find all of the original screens in the basement, whew!!!
Second Violation, I had removed all of the old furniture in the unit in order to dispose of it before I painted and installed flooring and cleaned the carpets. One violation was that I had to raise the dining room chandelier (where there would normally be a table) which was already temporarily hooked up in order that someone didn't hit their head. What? OK first of all, it was already hooked up out of the way, second of all, it would be lowered when a table was under it???? They could not understand that concept, so I had to shorten the chain and rewire the fixture so there was no chance that someone could hit their head on it under any circumstance! Yes it had already passed the City of Rahway C/O requirements.
OK, there were other minor (some major) items that needed to be RE-INSPECTED prior to getting my approval and the lady had already given me a deposit and was planning on moving in on Sept 1.
We're running out of time!
Ok, finally get my 3rd inspection to check the items that were not clear in the original inspection report that were repaired and then had to be repaired again differently. You can just imagine my frustration as the other tenant in the 2nd apartment-not section 8 was moving in early as they were both apartments were ready at the same time!
Not to mention all of the paperwork you have to provide for the Dept. It is stacks and stacks, approvals, leases, applications, rental amounts, blah blah blah blah blah!!
Now I thought I was over all of the hurdles, then the government worker that was handling my file got transferred. I keep calling leaving voice mails and waiting on hold and nobody answering or returning my messages. What a joke, she leaves, then my file gets "lost" in the shuffle. I thought my file was done and I am waiting for the "approval letter" in order for me to let my great tenant move in. OMG, you can imagine my frustration...Other tenant in other apartment already moved in! I can't let my section 8 tenant move in until I get the approval letter. She's frustrated, she already rented the moving truck, etc...I'm like "you can't move in until the State verifies that I am approved to have you move in" I need it in writing. OK, holiday weekend, another delay...two more trips to the Section 8 office in Plainfield to hand carry the paperwork, new case worker! Many more voicemails with no return calls.
More to the story: Ok, get the approval letter, she moves in, everything is fine? Where is my rent from the State? Well, I finally received a check from the state of New Jersey in late November for September, October, November. Can you imagine if I was a normal person having to scrape together the money to make the house payment each month and not having the rent money to come in to cover it? This would have been a desperate situation for many other landlords.
Now comes down to my frustration that poked me to write this blog.
The Dept. requires a yearly inspection that was performed last week in order to extend the contract to the tenant another year.
This is what they found. Smoke detector had to be installed in a new location that was not required last year (adjacent to the other apartment at the entry lever) ok, I can understand that, easy fix. Door lock loose! (ok, but I have not been using the lock for the last year!) another easy fix.
This is the one that killed me; The missing screen in the front bedroom. It was there last year and passed, did I remove it? NO! Why would that be my responsibility when it was there last year when it passed.
This is Section 8 in a nutshell.
Please feel free to comment on this blog as I am constantly seeking additional education, thanks.
I will definitely think a little harder next time I receive a section 8 tenant application. This is a service that we are providing as Landlords to assist needy individuals. It does not benefit us financially any different than another non-section 8 tenant. I understand the need for safety and wish to comply.
I can not tell you how many additional hours I had to put into this apartment in comparison to the other apartment that was identical. Fortunately, I have two great tenants!
