How to Go Through the Section 8 Tenancy Approval Process

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Navigating the Section 8 tenancy approval process for multifamily properties can seem daunting at first, but with the right understanding and approach, it can be a smooth and beneficial experience for both landlords and tenants. Section 8 (Sec. 8), also known as the Housing Choice Voucher Program, provides rental assistance to low-income individuals and families, making it an attractive option for property owners looking to expand their tenant pool while ensuring steady rental income.

At JP Acquisitions, our strategy is one in which we seek to purchase properties from tired landlords who are not maximizing the efficiency of their properties. We’ve found that by utilizing the Section 8 program, we can achieve rents that are higher than that of regular market tenants as well as charge back for utilities. We’ve been successful with this strategy thus far in the west side of Chicago and will continue to maximize returns for our investors with this strategy unless we find a more efficient business plan.

In this post, I’ll walk you through the steps involved in the Section 8 tenancy approval process for multifamily properties and the expected time frame of each step. In addition, I will talk about the drawbacks and benefits of the program so that you can get a better gauge if utilizing this subsidy is right for your assets. Before diving into this post, I want to mention that JP Acquisitions does not work with project-based vouchers, bur rather with individual voucher holders. What this means is that the subsidy is attached to the tenant as opposed to the property. Additionally, not all housing authorities have the exact same process and timeframe, but it tends to be quite similar. That said, let’s jump in!

Note – The definitions of the technical terms in any of our posts can be found in the glossary section of our website.

The 8 Step Process

1) Request for Tenancy Approval (RTA) Packet Submission: The first step in the tenancy approval process involves submitting and completing an accurate RTA packet to the local housing authority (LHA). In the case of our market, that would be the Chicago Housing Authority (CHA). The RTA packet asks basic questions such as the voucher holder name, the property address, mailing address, if the potential tenant has been screened, and a few other questions. That packet can be uploaded online to the local housing authority portal.

2) Determining Eligibility (Est. Time Frame: 7 Business Days): The information in the RTA packet is used to determine the eligibility of the property owner. The housing authority will conduct a criminal background check and/or verify the Certificate of Good Standing if it’s a business that owns the property. The LHA will verify the proof of ownership, management authorization, and that property taxes are current.

3) Scheduling Inspection (Est. Time Frame: 5 Business Days): The LHA will schedule an initial inspection, as required by HUD. The property owner will receive a call and email informing of the date and timeframe of the inspection appointment. The owner and/or authorized agent must be present for the initial inspection. Participants may also attend, but are only required to be present for inspections once the unit is under contract.

4) Conducting Inspection (Est. Time Frame: 5 Business Days): The LHA will conduct an inspection of the unit according to Housing Quality Standards (HQS). The unit must be rent-ready including having all utilities turned on and operating safely. If the inspection does not pass the inspection, the property owner will be allowed 14 days to make repairs and call CHA to schedule a re-inspection. If the unit does not pass the re-inspection, they will cancel the moving process for the unit.

5) Determining Rent (Est. Time Frame: 5 Business Days): The LHA will contact the owner with a rent offer, which is based on the rent of comparable unassisted units within a ~1-mile radius that have been leased within one year as well as participant affordability.

6) Rent Acceptance (Est. Time Frame: 2 Business Days): The LHA awaits the property owner’s acceptance of the rent offer. If the rent offer is not accepted within two days of the offer, the LHA will cancel the move.

7) Contract Send (Est. Time Frame: 5 Business Days): The LHA sends the Housing Assistance Payment (HAP) Contract packet to the property owner via email and requests for the owner to sign and return the documents with the corresponding lease. Some LHAs only accept leases where the effective lease date is on certain days of the month. For example, CHA will only accept leases where the lease effective date is either the 2nd or 16th of
the month. Nevertheless, If the documents are not received back within five days of the HAP Contract being sent to the owner, the LHA will cancel the move.

8) Contract Execution (Est. Time Frame: 5 Business Days): The LHA receives the signed HAP Contract and corresponding lease and sets up the account for payment. The LHA will execute the HAP Contract with the owner and process payment by the next available check run.

Total Time Frame: 34 business days (~7 weeks)

Pros and Cons of the Section 8 Program

Pros

Government subsidies mean that your rental income is more assured than in other cases. Under Section 8, tenants are responsible for approximately 30% of their rent.
Due to access to a specific demographic, Section 8 tenants may resolve persistent vacancy issues.
Inspections means that your property is less likely to have deferred maintenance and more likely to satisfy tenants.

Cons

Renting to Section 8 tenants puts your property under greater scrutiny due to government rules and regulations. HUD will determine your units Fair Market Rent (FMR) as well as make you go through inspections.
The leasing process is lengthy at a minimum of 7 weeks.
When selling a property, potential buyers may be turned off by the idea of Section 8 tenants.

Conclusion

Navigating the Section 8 tenancy approval process for multifamily properties requires careful planning, thorough preparation, and adherence to HUD regulations. By understanding the steps involved and working closely with your local LHA and tenants, you can successfully participate in the Section 8 program, expand your tenant pool, and provide safe, affordable housing options for low-income individuals and families.

If you have any questions regarding the terms and concepts in this post or previous ones, please reach out to either me (tedi.nati@jpacq.com) or someone on our team so we can help explain further. If you’re interested in investing with us at JP Acquisitions, you can contact us via our contact form, by emailing a member of our team, messaging us on LinkedIn, or signing up for our investor portal to set up a meeting.

As always, I hope you enjoyed reading this post as much as I have writing it. Best of luck!

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About the Author

Tedi Nati is the Managing Partner of JP Acquisitions. In his role he is responsible for broker outreach, establishing deal flow, underwriting, marketing, investor relations, and assisting in the closing process. In addition to his role at JP Acquisitions, he is an Assistant Equity Underwriter at Cinnaire, a non-profit Community Development Financial Institution (CFDI). In his role at Cinnaire, he is responsible for assisting the underwriting team in evaluating and structuring real estate equity investments and assessing the risks and mitigants associated with such. Tedi earned his Bachelor of Science in Finance from DePaul University, where he graduated Summa Cum Laude. In his free time he enjoys reading, looking for multifamily deals, and working out.

Make sure to always do your own research before making any final decisions on buying/investing real estate, stocks, or other securities. I am not a CPA, attorney, insurance, or financial adviser and the information in this blog post shall not be construed as tax, legal, insurance, construction, engineering, health and safety, electrical or financial advice. If stocks or companies are mentioned, I sometimes have an ownership interest in them – DO NOT make buying or selling decisions based on my posts alone. If you need such advice, please contact a qualified CPA, attorney, insurance agent, contractor/electrician/engineer/etc. or financial adviser.