What is HAKC? What is Section-8 and do I want to rent my investment property to a section 8 tenant? I get calls nearly everyday from investors who bought a Kansas City Investment Property and thinks they will profit hugely by renting it to a section 8 tenant.

There was a time when that may have held true but with the current system you will do well to get market rent and break even. The point system is gone and the amount of rent HAKC pays may be no better than what the open market would bring.

Turn-Key Properties LLC manages hundreds of investment properties in the Kansas City area everything from executive homes and luxury lofts and condos to some properties on the section-8 program. After many years of trying to work with this failed organization we are currently declining many requests to manage any more.

First we must answer the basic questions of what is section eight. The Section 8 Rental Voucher Program is authorized by the U.S. Housing Act of 1937, Section 8(b) (1) for existing housing and Section 8(o) for vouchers. Regulations are found in 24 CFR Part 982. It is administered by HUD's Office of Public and Indian Housing. Its stated purpose is to increase affordable housing choices for very low-income households by allowing families to choose privately owned rental housing.

http://www.hud.gov/progdesc/voucher.cfm

Basically tax payer funded assistance for rental payments for people of moderate means.

Like all other government programs it continues to grow out of control and has been horribly mismanaged. Those that know how to work the system benefit and those that may really need the assistance are all too often left out. (My personal opinion.)

Locally Section-8 is administered by HAKC or the Housing Authority of Kansas City. There are several other housing authorities managed by local municipalities like Independence, MO, Lee's Summit, MO and Johnson County, KS.

In all, most of them run relatively effectively except for the glittering jewel of incompetence that is the HAKC. At one point the chaos was so severe that the HAKC was put into receivership. Since that time it has gone through a list of directors, administrators, employees and inspectors that would make your head spin. Rules change weakly, case managers come and go. The person you dealt with yesterday may not be there tomorrow. At one point HAKC issued 750 vouchers and then revoked them leaving people homeless and some who had already moved with no way to pay rent. http://www.thekansascitychannel.com/newsarchive/10837707/detail.html?

One very frustrating problem is the frequent loss of documents that are delivered to HAKC. Documents delivered many times do not get to the intended recipient and therefore are never accounted for. We instituted a policy of requesting a signature for receipt of documents and recently we have been told by Clifford Scott, that they will not sign for any documents.

Turn-Key Properties LLC  has implemented a new procedure requiring owners to acknowledge certain terms should they want us to accept vouchers from HAKC. They are as follows.

The process may take up to three months for HAKC to process the Booklet, complete the property inspection, execute the Contract, approve the tenant to move in and begin actual rent payments.

The exact amount of the rent you will receive may NOT be determined until the Contract is executed, which is toward the END of the process....AFTER the Booklet has been turned in, AFTER the expense of the property inspection has been spent and AFTER the property inspection has passed.  At that time, if you are not happy with the amount of rent granted and decline that amount, the entire process of finding a tenant will have to start all over again.

At that point, if Turn-Key has brought forth a qualified, approved tenant and you decline the amount of rent offered by HAKC, the Management fee will still be charged to you, because we brought a qualified tenant to the table and it was your decision to accept the terms of a Section 8 Tenant with the Housing Authority of Kansas City.

The time-frame between the property passing inspection and the Contract being executed can be a month or longer.  This means it could be another month or longer before the Tenant will be allowed to move in and when rent will begin being paid, even after the unit passes the inspection.

While the Tenant is living in the unit, the Tenant's Voucher can be revoked by HAKC, at any time, for reasons that will not be disclosed by HAKC, rent payments will stop and it will then be your responsibility to get the Tenant out of the unit.  This process is the normal Eviction process in the Jackson County Court system and can take up to three months to complete. 

If the Tenant does not pay their portion of the rent, HAKC will not offer any assistance with convincing the tenant to pay the rent.  If you wish to remove the tenant for non payment of rent, you will need to go through the normal Eviction process in the Jackson County Court system and can take up to three months to complete.  Even after a Judgment is obtained against the Tenant for non-payment of rent, HAKC may still move them into another Section 8 assisted unit. 

If the Tenant completely destroys your unit, HAKC will still allow them to move into another Section 8 assisted unit.  HAKC has no interest in Tenant damages at all! 

That stated the next question is, do you want us to place a section 8 tenant in your home.

Benefits of a section 8 renter:

Your rent is paid by another entity and the checks don't bounce.

You may get slightly higher rent.

Detriments of a section 8 renter:

Annual inspections: The home will require specific repairs to meet the requirements annually.

Increased cost: The inspections not only require maintenance but also require the presence of a service technician to grant access to the property. HAKC will give a four hour window that the inspector may be at the home. We must have a maintenance technician there during that period of time.

Homes built prior to 1978 may require considerably more maintenance and a great deal of more expense. Because of the potential presence of lead in the paint used prior to that date, any building on the Section 8 program can have NO peeling, chipped, cracked or worn paint surfaces. That means NONE! We will have to repaint, touch-up and repair any worn paint in that home.

What does that mean? Huge costs, painted floors, steps, handrails, or any other well used surface will wear within that time. Those surfaces will have to be repainted. Wooden windows; just the act of opening and closing a window can cause wear on the painted surfaces. Those surfaces must be free of any damaged paint.

Paint dust, chips or peelings are a major hazard, if those elements are found by the inspector, if any peeling paint is seen you may be required to pay for the removal and containment of the substance by a certified contractor. (Turn-Key is certified) You may also have to pay for a test by a certified professional for the presence of lead. This can cost hundreds, even thousands depending on the property.

Do the math, if your property was built before 1978 you will likely do better to avoid subsidized housing and market your property on the open market, unless things change drastically at the housing authority.