Imagine having a residual income that can help your mortgage pay for itself. This is a reality for many landlords in the United States.
The country's average asking rent is just over $2,000, and it's highly likely you can pay your property's ongoing costs and still turn a profit. However, there's certain information to keep in mind when working with low-income tenants.
Section 8 allows you to maintain your revenue while renting to people who don't have a substantial income. Let's explore how you can keep your rent reasonable for your rental properties.
How Does Section 8 Work?
Section 8 allows people within a certain income range to apply for a voucher when looking for housing. This voucher allows them to substantially reduce the amount they pay in monthly rent while helping the landlord maintain their rental income.
The voucher's amount will depend on certain factors, such as the tenant's income and the average rental rates in the area. Immigration status and criminal history also play a role.
Setting Reasonable Rent
It can be difficult to strike a balance between affordability and profitability when setting rent. In general, it's recommended to set your rent at approximately 1% of your property's total value.
To clarify, let's assume you own a house worth $500,000. This rule dictates you should set your rent at $5,000.
You should be flexible, though. If the rental market in your area has many cheap homes, consider lowering your rent to be more competitive.
The last thing you want is to deal with vacancies for your rental property. These can cost thousands per month.
Consider Your State's Laws
Some states have laws that limit what you can charge your tenants. It's imperative to consider these when setting your rent amount so you avoid issues you may have otherwise encountered. There may also be stipulations for late fees, security deposits, and similar rent-related charges.
Understand Your Tenants
Tenants who use Section 8 vouchers will typically have a much lower income compared to many other tenants you interact with. If you aren't careful, you can easily price them out of renting your property. It's best to fully understand this demographic so you can make the right decisions.
Work With a Property Manager
Hiring a professional is the best way to handle situations like these. Property management companies have the tools and resources to ensure you get started on the right track.
When looking for one to hire, explore their past reputation. Only hire companies that have a strong amount of positive feedback. You should also look into their pricing structure so you gain insight into how they're compensated.
Use Appropriate Rental Pricing Strategies
While Section 8 can help you stay profitable as a landlord, it's still important to set your rent carefully. This ensures you'll get the best results without running into legal complications.
PMI Southern States is a full-service real estate asset management company that always strives to exceed customer expectations. We provide a variety of services, including tenant screening, rent collection, and maintenance. You can learn more about what we offer by scheduling a free rental analysis.