How Does Section 8 Housing Work for Landlords? - MHA Benefits

[00:00:00 – 00:00:14] Brett: It is five o'clock somewhere. Real estate investor podcast time. And today we are going to talk about the Section 8 program and the local version MHA program. In the studio with us is we got Amisha Herron. Herron. Do you say Herron or Herron?
[00:00:14 – 00:00:14] Ameisha: That's right.
[00:00:14 – 00:00:26] Brett: Heron. Yeah, Heron. And she's an MHA placement agent. And we're going to discuss the program and the benefits of it and why a lot of investors are using it and if there's any negatives to it. So stick around.
[00:00:30 – 00:00:54] Sponsorship: We are sponsored by Title Assurance and Escrow, a title company here in Cordova that does all of our closings title work, escrows. And we only use title Assurance and escrow. That relationship is very important because we can get things done for our investors quickly and easily. So to speak, with title, Assurance and escrow. Call 901-737-3333. Ask for Kris or April.
[00:00:57 – 00:01:03] Brett: Okay, we're back. And in the studio, we got Marissa Miller. We got Amisha Heron.
[00:01:04 – 00:01:05] Ameisha: Trap house, Misha.
[00:01:05 – 00:01:07] Brett: You got to pull up. You got it close. Now.
[00:01:07 – 00:01:08] Ameisha: Trap ass, Misha.
[00:01:08 – 00:01:10] Brett: Trap ass, Misha. Trap ass, Misha.
[00:01:10 – 00:01:11] Ameisha: Trap.
[00:01:11 – 00:01:12] Brett: Okay.
[00:01:13 – 00:01:14] Marissa: Trap house.
[00:01:14 – 00:01:15] Brett: Trap house. Okay.
[00:01:15 – 00:01:16] Ameisha: Trap house, Misha.
[00:01:16 – 00:01:38] Brett: And then we've got. We got Jeff McNett in the studio with us. We are missing our British producer. Some people may think that's a bad thing, but I think it's a good thing. So, Amisha, let's talk about MHA. Actually, let's talk about Section 8 as a whole. Let me run over a few facts that our British producer was able to pull up for us. And there are actually some things in here I didn't know. We use MHA program a lot, but I'm not familiar with a lot of the statistics nationally.
[00:01:38 – 00:01:39] Ameisha: Hold on one sec.
[00:01:39 – 00:01:39] Brett: Yeah.
[00:01:39 – 00:01:48] Ameisha: Shout out to Brit first. Let's give you a shout out because you're the hottest broker in Memphis. That get.
[00:01:48 – 00:01:52] Brett: You're saying I'm good looking or you're saying I'm just good in business? I'm just. I'm kidding.
[00:01:53 – 00:01:55] Ameisha: The tan is popping. The tan is popping.
[00:01:56 – 00:01:57] Brett: Look like you.
[00:01:57 – 00:01:58] Ameisha: I'm. Honey, go.
[00:01:58 – 00:01:59] Brett: You wanna.
[00:01:59 – 00:02:02] Jeff: You wanna switch seats with me so you get closer to me?
[00:02:02 – 00:02:18] Ameisha: No, no, no, no, no, no, no, no. Shout out to you, though, for real. I've appreciated the. The business. Brett is remarkable at getting investors and the process and, you know, we collab and we make stuff happen.
[00:02:18 – 00:02:28] Brett: Yep. I appreciate that. Thank you. Not many people talk nice things about me, especially our producer. I did hear a few good words out of the. These Other two earlier before we got on Mike. So I appreciate that.
[00:02:28 – 00:02:30] Jeff: He'll for sure edit that out.
[00:02:31 – 00:03:54] Brett: So let's go through some of the facts that were pulled up. So I didn't realize this, but Section 8 program serves 5 million households. Nationally, the government pays between 70 and up to 100% of the rent directly to the landlords. Section 8 is a federally funded and locally administered, meaning every city's got its own Section 8 division that administers the vouchers. Memphis Housing Authority, or MHA, currently has 13,000 or manages 13,000 plus vouchers. I didn't realize there's that many. That's a lot. And what I found was interesting is that the fair market rent for a two bedroom in Memphis is $1,247 MHA versus an average market self pay rent for that same house would be 1100. So there's about $150 difference between self pay tenants and MHA tenants. And it's guaranteed funds. So let's talk about MHA. Memphis Housing Authority. Misha does a lot of, actually pretty much all your placements from mha. And explain to us quickly because my investors love MHA because it's guaranteed money. And we've noticed in the last couple years that a lot of the tenants that we're getting and because of the rules and stuff that MHA has put into place, these tenants tend to take good care of the home. They tend to stay longer. What is the rule for MHA voucher holders? I always heard there's a rule that if you lose your voucher, you're out, you're not going to get it back.
[00:03:54 – 00:03:55] Ameisha: Case by case.
[00:03:55 – 00:03:56] Brett: Case by case.
[00:03:56 – 00:03:57] Ameisha: That's a case by case.
[00:03:57 – 00:04:06] Brett: Okay. So if someone tears up a house and then they move and that landlord complains to mha, would that tenant lose their MHA status?
[00:04:06 – 00:04:26] Ameisha: So there are steps that should be taken before getting that far into it. Okay, so definitely when you take on a MHA tenant, when you become an MHA or a Section 8 landlord, you know your lease is what's important.
[00:04:27 – 00:04:34] Brett: So now you have your. The landlord has their own lease, but you submit that to MHA for getting the voucher?
[00:04:34 – 00:04:37] Ameisha: Yes. Yeah. You have your. Whatever your lease may be.
[00:04:37 – 00:04:45] Brett: So you can put in no smoking, no pets. And there's no requirement by MHA or Section 8 to allow pets or allow them to smoke?
[00:04:45 – 00:04:46] Ameisha: No.
[00:04:46 – 00:04:46] Brett: Okay.
[00:04:46 – 00:05:38] Ameisha: No, not at all. Because you as a landlord, if they want to maintain the H Vac, they have to change their filters. So of course you may want to Eliminate the smoking because they're not changing the filters. Then the filters are caught with smoke and all this stuff. But that's. That's, you know, that's if you want to. Sure, it's not a demand, but a tenant destroys a house and they could possibly lose their voucher. Generally, MHA does a yearly inspection, right? They do a yearly inspection. But you as your landlord, as the landlord, you can hire someone like me. You know, we do checks maybe weekly or monthly just to ride by, see how the maintenance of the property is. Maybe schedule a quarterly walkthrough maintenance check or something like that.
[00:05:38 – 00:05:40] Jeff: But you would encourage that, right?
[00:05:40 – 00:05:41] Ameisha: Definitely.
[00:05:42 – 00:05:50] Brett: What are the MHA inspectors looking for? Are they checking on the tenant to make sure tenant's taking care of the home and checking on the landlord, make sure the landlord's maintaining the property?
[00:05:51 – 00:06:37] Ameisha: Both. So that's why it's important to kind of stay aware of those annual time frames on when the lease is up. Everything's kind of done maybe 60 days prior to ending of a lease, or everything is timed out so you have time so they'll. And they're going to notify you. So. So annuals coming up. All right, let me go check on this property and see if any repairs are needed. Maybe she hadn't reported them or something. And then when they come out, then it's gonna be something on the owner's end that we may have to repair, but it could have been avoided. However, if you see where that tenant has neglected the property, that is when you can say, you know what? I don't wanna deal with her out. File eviction out.
[00:06:37 – 00:07:14] Brett: So we do an inspection. MHA sees they're not taking care of the home, they're not going to evict her. They may tell her we have to evict her. Right, that's what I'm saying. But they may tell her, if you don't take care of this home, then you're at the mercy of your landlord. He can't evict you. So let's say the landlord decides to evict and that tenant loses her voucher. The reason why I'm bringing this up is because there's always been a lot of questions around from out of town investors about MHA. Well, how hard is it to evict him? Is MHA going to fight me on it? Is MHA going to prevent me from evicting? I kind of tell them, no. All MHA do is do doing is paying part of their rent. That's it. They're not Legally liable for anything that's in a lease.
[00:07:15 – 00:07:22] Ameisha: Nope. So that's why it's important that. And you can report all you want to and all they're going to say is enforce the lease.
[00:07:22 – 00:07:33] Brett: Enforce the lease. So they follow the lease law, period. Okay. So just because they're a government agency doesn't put them above what your lease terms and the law says. That's good to know. I did not know that.
[00:07:33 – 00:07:51] Ameisha: Now, you know, tenants have ways around things or you know, people know people. So it's always, it may be something. So I don't know. We won't know for sure if that tenant permanently lost her voucher or not. We won't know. But we wouldn't care. We just got them out of ours.
[00:07:51 – 00:08:04] Brett: Okay. My understanding has always been that they always work harder to take care of the home because they fear they're gonna lose their voucher. And if they lose their voucher, they can't. They'll have to go back to living in that little one bedroom apartment that they used to live in before they were able to get the MHA status.
[00:08:04 – 00:08:05] Ameisha: Yeah, that's true.
[00:08:05 – 00:08:38] Jeff: Well, Brett, let's, let's back up just a minute and you know, let's just clear the air. The negative stigma behind Section 8. Most people think Section 8 are for poor, lazy people that don't have jobs, don't want to work, sell drugs, this, that the other misha can correct me if I'm wrong, but this is a great program for lower income people. These people work, have jobs, have children, send them to school, and they're just looking for a little assistance to help provide a safe roof over their family's head.
[00:08:38 – 00:08:44] Ameisha: No, that's bad. I mean, that sounds too good.
[00:08:44 – 00:08:47] Brett: Well, I mean, let me tell you, hold on.
[00:08:48 – 00:08:56] Jeff: I mean, I get it, you know, not renting a $4,500 a month house in Germantown, but they're, but they're not a bunch of gang banging drug addicts that don't have jobs.
[00:08:56 – 00:08:58] Brett: And well, look at it this way.
[00:08:58 – 00:09:00] Jeff: Self pay, most of them are good hard working people.
[00:09:00 – 00:09:05] Brett: You can get bad people with self pay and you can get bad people with mha. There's no difference.
[00:09:05 – 00:09:18] Ameisha: Well, let me say this. MHA has self paying attendance as well. So those hardworking individuals that you're talking about, they probably pay more on their rent.
[00:09:18 – 00:09:21] Jeff: They may pay 50 to 70% of the rent.
[00:09:21 – 00:09:22] Ameisha: Yes, correct.
[00:09:22 – 00:09:24] Jeff: You know, to me, that's a good renter.
[00:09:24 – 00:09:27] Ameisha: Right, right. And there are, they're, they're going to.
[00:09:27 – 00:09:28] Jeff: Take care of the House, they're going.
[00:09:28 – 00:09:36] Ameisha: To take some that get full vouchers, and then they may work, but it's not reported.
[00:09:36 – 00:10:02] Brett: I think that the three homes for Mario that you went. You placed tenants for, those are great tenants. We went, right. We went to do the repairs, inspect the repairs so we could close. And I'm not gonna lie, I was pretty impressed with all three of them. They were very. I was kind of excited. I'm like, wow, these are three good tenants. Now, I know one or two of them work from home. I think the other girl works nights.
[00:10:02 – 00:10:04] Ameisha: Maybe one is a correctional officer.
[00:10:04 – 00:10:22] Brett: Okay, that must have been the one in Hilton. Yeah. So overall, I tell investors the same thing, and our listeners need to know this. You can get a good tenant, bad tenant, whether self pay or MHA, Section 8, whatever it is, you can get a good tenant and a bad tenant. That's just part of it.
[00:10:22 – 00:10:25] Jeff: You can get a bad tenant in germantown and a $600,000 house.
[00:10:25 – 00:11:00] Brett: That's correct. But I will say this. In 2007, I had a couple rental properties. They were MHA and I had a horrible experience. But since the new director took over at MHA and they started revamping it and trying to. Trying to clean up the process and trying to get investors to come back into the Section 8 program, because I know they lost a ton of them because they just got tired of getting beat up by MHA over something a tenant broke. But since that change, we've seen a flood of investors come back into the Section 8 Memphis Housing Authority program. And my investors that use it absolutely love it.
[00:11:00 – 00:11:07] Ameisha: I will say, in the past three years with the new constructions, yeah, those tenants absolutely love those homes.
[00:11:07 – 00:11:08] Brett: And they take care of them.
[00:11:08 – 00:11:18] Ameisha: They take care of them. The ability to be able to live in a new home, raise your children, maybe not in a desired area, but it's a brand new house.
[00:11:18 – 00:11:22] Brett: Well, in a lot of those areas, because of the new construction, they're starting to develop and go up.
[00:11:22 – 00:11:23] Ameisha: Correct.
[00:11:23 – 00:12:26] Brett: So, yeah, we, we. We see a lot of that. I've watched a couple of streets that I started on three years ago and where they're at today. And I mean, they're predominantly. They're all rentals. So it's easy for someone to say, well, that's, you know, that's a crappy street. But no, I mean, if it's, if the right development is going on, it's going to be. It's going to move up in stature over the next couple of years as, as other investors begin to buy and sell on that street. So here's something. And just for our listeners, when we're talking about Section eight, mha, if you're an investor looking to be an investor and you don't know about Section 8, you probably ought to stop, just revisit that before you become an investor. Because it's a wonderful tool. It does have some negatives, but so does every other kind of investment. But at the end of the day, it basically is Memphis Housing Authority getting the federal section 8 funds. And they go, someone applies to get a MHA voucher. They look at their income, they look at all these different factors and they say, okay, well based on your income and based on that, you can rent a house at up to $1,500 a month and we'll pay $1,000 of that and you pay 500.
[00:12:26 – 00:12:53] Ameisha: Right. Because like you said on the research, something about the two bedrooms for $1,200. That is exactly how they look at it. They look at the family size and they look at your income. If you do not have income, then they may go back to another year or so and look at the fair market rent and kind of place it. So a full paying tenant with zero income, their two bedroom voucher probably would be like $1,000.
[00:12:53 – 00:13:01] Brett: It'll go down. It goes down because they're not contributing. So that's what I'm saying. If the vouchers were 1200, they put it at 1200 because they're expecting that tenant to pay 2 to 300 of that.
[00:13:01 – 00:13:02] Ameisha: Correct.
[00:13:02 – 00:13:04] Brett: Their cap is going to be 1000 or whatever it is.
[00:13:04 – 00:13:07] Jeff: Would that cap be higher on a three bedroom?
[00:13:07 – 00:13:12] Ameisha: No, no. That's not necessarily because their cap, it could be vice versa.
[00:13:12 – 00:13:15] Brett: Right. Well, we've got one that they're paying the majority of the rent.
[00:13:15 – 00:13:19] Ameisha: The tenant could be a thousand. Right? Right. She pays like 985.
[00:13:19 – 00:13:21] Brett: Yep. And the balance is paid by MHA.
[00:13:22 – 00:13:23] Ameisha: So is a Whittier as well.
[00:13:24 – 00:13:37] Brett: So that's based on the fact that her income level. Right, okay. But you know, a lot of people think, well, I've got to worry about tenant not paying their portion of rent. Well, look at it this way. They're in a brand new home that they're paying 980amonth for.
[00:13:37 – 00:13:37] Ameisha: Right.
[00:13:38 – 00:13:59] Brett: Why would they not pay their rent? Because you're not going to get a brand new beautiful home like that for 980amonth anywhere in the city. So I, you know, they're motivated to pay their rent because if they don't, they're going to lose the home. That argument. Maybe back in the day, in the old Section 8 program, it was like that, you know, somebody owed you $200 a month in rent and that meant you section eight paid the rest. You'd have to chase them for the $200.
[00:13:59 – 00:14:01] Jeff: Let's talk about how it works real quick.
[00:14:01 – 00:14:31] Brett: Well, hang on. Before we do that, I want to ask her a question, because I didn't know this and I don't know if they have these two types of vouchers here. There's two types of vouchers. There's a tenant based voucher, which the voucher follows the tenant. Right. So they can move and their voucher goes with them. And there's a project based voucher where there's a voucher for a home so an investor can get a voucher from MHA for his home. And whoever moves in there, that's the rent amount. Do they have those type of vouchers here? You named that what it's called project based, where the voucher stays with the property.
[00:14:31 – 00:14:34] Marissa: A project voucher, Is that a thing here?
[00:14:35 – 00:14:36] Ameisha: Yeah, okay. Oh, definitely.
[00:14:37 – 00:14:38] Brett: Okay. I've never even heard of that before.
[00:14:39 – 00:14:44] Ameisha: Memphis had a lot of projects back in the day. You got foot homes, clabor homes, all that.
[00:14:44 – 00:14:49] Jeff: Well, they still have 11. That's what you're considering, project based or the high rise apartment complex?
[00:14:49 – 00:14:51] Ameisha: Correct. That's where you have actual.
[00:14:52 – 00:14:53] Brett: Oh, so it's with the building.
[00:14:54 – 00:14:56] Marissa: They're not saying like a home, a single family home.
[00:14:57 – 00:15:00] Jeff: MHA still manages 11. Project based.
[00:15:00 – 00:15:02] Marissa: Okay, okay, that makes more sense.
[00:15:02 – 00:15:03] Jeff: Which is not for us.
[00:15:03 – 00:15:17] Ameisha: So that's project, tenant housing voucher. So you have a tenant. The first one is the housing choice voucher. Yeah, that's where the tenant can go anywhere in the United States that is section eight. They can go state. State. They can port in and out.
[00:15:17 – 00:15:26] Jeff: Amisha, let me ask you how it works. Okay, so these tenants, these applicants go to MHA and apply for the housing.
[00:15:26 – 00:15:28] Ameisha: Choice when the wait list is open.
[00:15:28 – 00:15:29] Brett: Right, right.
[00:15:29 – 00:15:49] Jeff: And my, my experience is MHA runs out of funding and they, it's possible they refund about. Like, I go to the website periodically. We're. We're not taking any applicants right now because we basically ran out of money. But they'll get refunded a couple of times a year. It's just kind of sporadic now.
[00:15:50 – 00:15:58] Ameisha: Yeah, yeah, yeah, I've seen it. Yeah. Because like, recently, just like what, the beginning of this month, they had opened up the wait list, right?
[00:15:58 – 00:16:00] Jeff: Yeah. They must have got more funding.
[00:16:00 – 00:16:01] Brett: How Many people on that wait list.
[00:16:01 – 00:16:06] Ameisha: No, no, no. What's happening is project based homes have to be filled.
[00:16:06 – 00:16:08] Jeff: Yeah. They supersede first, they get first.
[00:16:08 – 00:16:11] Marissa: So like apartment complexes, that takes place.
[00:16:11 – 00:16:21] Ameisha: All of those projects. So that's why people have lived there, have now, you know, okay, they can move, they learn, they can move into homes.
[00:16:21 – 00:16:21] Jeff: Right.
[00:16:22 – 00:16:29] Ameisha: After so long. So they, they've gone out into the home. So now. And not only are those vacancies, but we're still building.
[00:16:29 – 00:16:29] Brett: Right.
[00:16:30 – 00:16:32] Ameisha: I think a new one's on the way somewhere.
[00:16:32 – 00:16:35] Brett: I know the developer in town is going to build four here.
[00:16:35 – 00:16:36] Ameisha: Right.
[00:16:36 – 00:16:44] Jeff: But Ameisha, the way it works is and someone will go to mha, apply for the housing choice voucher.
[00:16:44 – 00:16:46] Ameisha: It's like the lottery.
[00:16:46 – 00:17:11] Jeff: And then all these people just running around town, you know, I get a call, hey, do you rent MHA or so you. As a tenant placement specialist, we'll call you. MHA doesn't provide you with a list of names they've given vouchers to. You have to go out and market a website, Facebook, social media, whatever. That's all on you. Right. Would it be so much easier for everybody if they would just supply you.
[00:17:11 – 00:17:13] Brett: A list of who had it, who has a voucher?
[00:17:13 – 00:17:16] Jeff: If MHA gave you a list, it seems like it'd be beneficial to me.
[00:17:16 – 00:17:18] Ameisha: I don't work for mha.
[00:17:18 – 00:17:22] Jeff: How wonderful would it be if they gave you the list?
[00:17:22 – 00:17:23] Brett: The chances are happening.
[00:17:24 – 00:17:26] Ameisha: He said 13,000. I could handle that.
[00:17:26 – 00:17:28] Jeff: Well, but you could pick and choose is what I'm saying.
[00:17:29 – 00:17:33] Brett: They're servicing 13,000. There's not that many people looking, right?
[00:17:33 – 00:17:34] Jeff: No, no.
[00:17:34 – 00:17:38] Brett: Right, but they got it. They're, they're 13,000 plus vouchers that MHA is handling.
[00:17:38 – 00:17:54] Jeff: You see the lulls in the program, like, you know, you go to the website. Okay, we're, we're behind. We ran out of funding. We're not. Everything's on hold right now. That makes your job harder because now you've got less tenants out there running around with vouchers. How's that work?
[00:17:54 – 00:18:02] Ameisha: No, because there's so many. Because tenants move. You got tenants being on the program 30 years, 25 years.
[00:18:02 – 00:18:03] Brett: Wow.
[00:18:03 – 00:18:19] Ameisha: You know, you may have a tenant that's been in one house for 15 years. Once she first got pro, she been with that same land. And so maybe he has multiple properties and he decides to sell or if anything happens, he dies or it forecloses. Now she has to move.
[00:18:19 – 00:18:24] Jeff: So you constantly have an inventory of people with vouchers out there looking.
[00:18:25 – 00:18:37] Brett: But to add Onto that again, the higher the voucher or the higher the rent amount that the investor wants, those kinds of tenants shrink. There's less tenants with an eighteen hundred dollar voucher, but there's probably tons of them with a $1200 voucher.
[00:18:37 – 00:18:41] Ameisha: There's tons of them with fifteen or tons of them with a thousand.
[00:18:41 – 00:18:58] Brett: Well, let me ask you this. So. And you explained this at one time, I didn't quite grasp it. But if Marissa has a 1500 dollars a month voucher and she has a job, does MHA say you cannot rent above 1500 because they've checked her income?
[00:18:58 – 00:18:58] Ameisha: Yep.
[00:18:59 – 00:19:07] Brett: And so her voucher will say max of 1,500, even though they're only paying 1,000. If this girl decides she wants to pay $500 out of her own pocket, you can't. They won't let her do it.
[00:19:07 – 00:19:08] Ameisha: You're mixing it up.
[00:19:08 – 00:19:09] Brett: Okay, well straighten it out for me.
[00:19:10 – 00:19:13] Ameisha: Say what you just did because you. Cause you saying she has a 50.
[00:19:13 – 00:19:17] Brett: Let's say she has a $1500 voucher for. She pays and she's paying 500.
[00:19:17 – 00:19:19] Ameisha: She's got two sets of tenants now.
[00:19:19 – 00:19:20] Brett: Right.
[00:19:20 – 00:19:24] Ameisha: Marissa could have a $1500 voucher for a four bedroom.
[00:19:24 – 00:19:24] Brett: Okay.
[00:19:24 – 00:19:30] Ameisha: Right. And after they've looked over her income, they say, well, you don't have to pay anything.
[00:19:30 – 00:19:31] Brett: 1500 flat.
[00:19:31 – 00:19:37] Ameisha: They're gonna say, but we pay 1500 on your behalf.
[00:19:37 – 00:19:40] Brett: Now what if the house is 1700? Can she pay the 200 out of her pocket?
[00:19:40 – 00:19:41] Ameisha: Nope.
[00:19:41 – 00:19:46] Brett: Because they give her. That's what was my question is if they give her a voucher of 1500, that's her cap.
[00:19:46 – 00:19:47] Ameisha: Yep, that's her cap.
[00:19:47 – 00:19:52] Brett: But she can turn around and rent a 1300 square or $1300 a month house. You don't have to use a whole voucher.
[00:19:52 – 00:19:53] Ameisha: Why wouldn't she?
[00:19:53 – 00:19:54] Brett: I'm just saying, I'm just.
[00:19:54 – 00:19:55] Marissa: Could you do that?
[00:19:55 – 00:19:57] Brett: In other words, you can go down, but you can't go over your.
[00:19:57 – 00:20:00] Ameisha: It wouldn't even be the price. It would be the bedroom size then.
[00:20:00 – 00:20:01] Brett: Okay, based on bedrooms.
[00:20:01 – 00:20:22] Ameisha: Based on bedrooms. Okay, so some people have certain family sizes and sex, you know, two boys, two girls. She may just qualify for a three bedroom because two boys, two girls can share a room. Okay, but then she may have six kids or seven kids and then all different types.
[00:20:23 – 00:20:24] Marissa: Don't put that on me, girl.
[00:20:24 – 00:20:25] Ameisha: Right.
[00:20:25 – 00:20:27] Brett: You got seven kids, Marissa?
[00:20:27 – 00:20:30] Marissa: No, sir, I come in those.
[00:20:30 – 00:20:35] Ameisha: It be those little girls. The little petite women be having 15 kids. What? Not this one.
[00:20:36 – 00:20:50] Brett: Well, that's why I was asking, because you had mentioned something to me on some of the new construction, the four twos. I was asking you, I think we were trying to get 1900 on one. And you were like, no, the girl was capped at a certain number. I'm like, well, she just pay a difference. And you're like, nope, nope, can't do a difference.
[00:20:51 – 00:21:04] Ameisha: Because the thing is, you have to turn in when you're trying to get paid is based on the lease, the rent that you have that you said, well, the house could be 1,700, but her cap is 1550.
[00:21:05 – 00:21:07] Brett: Well, she cannot pay a dime over.
[00:21:07 – 00:21:22] Ameisha: That, like out of pocket of mha. Right. I mean, my thing is, if you're expecting to get $1,700 rent and MHA is only paying the 15, and y' all got some type of side agreement.
[00:21:22 – 00:21:23] Brett: But she could lose all the time.
[00:21:23 – 00:21:25] Ameisha: You can't sue her. You can't do anything.
[00:21:26 – 00:21:32] Brett: You have no recourse because MHA has limited it to that amount. Gotcha. Okay. Well, that makes sense. Quick question.
[00:21:32 – 00:21:46] Marissa: I don't. I don't even know if you'll know this answer, Misha, because I know you don't work for MHA, but do you know how long Section 8 takes, like when you get on this wait list? Because I'm sure there's a ton of people lottery. Yeah, it is.
[00:21:47 – 00:21:49] Brett: Just roll a big bunch of Bingo. Bingo balls.
[00:21:50 – 00:21:57] Ameisha: Yep. Yep. But I. So like, in just in my experience, I've seen where people. It's like two years.
[00:21:58 – 00:21:58] Brett: Okay.
[00:21:58 – 00:22:01] Marissa: Just waiting though, Right. Before they get a call or anything.
[00:22:01 – 00:22:09] Brett: That's two years for the. Let's make sure we clarify. I don't want to freak everybody out. Who's listening? We're talking about tenants applying for an MHA voucher.
[00:22:09 – 00:22:11] Marissa: Yeah. Not ones that already have ones that have it.
[00:22:11 – 00:22:13] Brett: And not landlords trying to get mha.
[00:22:13 – 00:22:14] Ameisha: Right.
[00:22:14 – 00:22:25] Brett: Because that. Typically we turn a house over to Amisha depending on the neighborhood and the size of the rent that we're trying to find. Like, obviously the higher rents, there's less renters with those kind of vouchers, but.
[00:22:25 – 00:22:29] Ameisha: You can get there, you know, so you want to. You don't want the vacancy.
[00:22:29 – 00:22:43] Brett: Well, even, you know, the ones on Burr, he paid 165 for those and he got 1550 tenants. And he's willing to go below that 1% mark because they're brand new homes with one year build a warranty, the zero maintenance for the first year period. I mean, that's pretty.
[00:22:44 – 00:22:47] Marissa: And then if I'M not mistaken. After the first year you can.
[00:22:48 – 00:22:58] Brett: Yeah. Then you increase it. So after you will make your 1%, get it to where you want it to be. But on a brand new home, if you can save that maintenance money and all that stuff the first year, then.
[00:22:58 – 00:22:59] Marissa: It'S okay to take a little less than that.
[00:22:59 – 00:23:03] Brett: One person take a $50, $100 a month less on the, on the cash flow.
[00:23:03 – 00:23:03] Ameisha: Sure.
[00:23:03 – 00:23:03] Marissa: Yeah.
[00:23:03 – 00:23:56] Brett: All right, well let's move into the next part of this because I always wondered when I estimate rents. You know, there's different ways online to do market rents for properties, but I've never been able to understand how MHA does there. So I just kind of say, well basically if the rent's 1200mha, I'll probably pay 1,350. I just kind of tack 150 bucks on top of market and that's about where they should land. I know it's not that simple. So for a two bedroom, fair market rent is $1,247 for MHA and 1,100 for self pay. That's market rent. Three bedroom MHA average is 1580 and the I'm assuming the market rent average for that is probably 1350 to 1400 on self pay. Do you know how they come up with the rent numbers? Like did they go in a neighborhood and say, okay, the average rent's 1,200. We want our tenants to get nice homes so we'll pay 1350.
[00:23:56 – 00:23:58] Ameisha: They have a comps, they run comps they use.
[00:23:59 – 00:24:14] Brett: But they always beat self pay. They always beat market rent. They always pay more than bar at least 10% every time MHA pays more than self. If you go to market rent analysis and I do a rent analysis on. Let's take one of the houses on birth.
[00:24:14 – 00:24:18] Ameisha: So is the fair market rent different from retail rent or what is fair market rent?
[00:24:18 – 00:24:35] Brett: Fair market rent is if I go online right now, pull up my program and I put in 3830 Burr, three bedroom, two bath, brand new construction, I come up with a rent, self pay market rent. What a landlord should charge and publish it at is like 1400.
[00:24:35 – 00:24:36] Ameisha: Oh yeah, I believe.
[00:24:36 – 00:24:42] Brett: But then you get an MHA tenant in there for 1550, 150 bucks above what market rent was.
[00:24:42 – 00:25:29] Ameisha: I believe they kind of calculate. I know that when I see vouchers and I'm not just quite accurate, but I know that their utilities sometimes are included in the voucher within the prices. So then that's why because. And that's why it's out there like that. Because I get a lot of tenants with three bedroom vouchers that say like 1638. I know. And I ask them, are they working? Do you have to pay a portion of your rent? And it's like, no. Well, when I actually see that paperwork and it shows that the shopping range 1337 to 1342, and then like the maximum they'll pay would be 16 something. But if you read further into it, it shows where this tenant also qualifies for utility assistance.
[00:25:29 – 00:25:32] Brett: Right. So that'll be included in that.
[00:25:32 – 00:25:34] Ameisha: That would be included, yeah. So you have to subtract that.
[00:25:34 – 00:25:38] Marissa: So you would only have to keep them in the range of, of the 13.
[00:25:38 – 00:25:42] Ameisha: Right. Shopping range. That's what. It's a shopping range. Okay.
[00:25:42 – 00:26:11] Brett: And leave it to the government to make everything so damn complicated. Why can't you just say, look, if market rents 1200, we're going to pay 1,350 and just put it out there? I get, you got to qualify the tenants for income. If they've got income, they should pay a portion. Let's face it, we have a lot of single moms in Memphis and all of them work and they all have one or two kids and they don't make enough money to live in a decent home. So the MHA program, at least in Memphis, has been an outstanding program for a lot of families and we do have our deadbeats. But you have that on all sides of the fence.
[00:26:11 – 00:26:11] Ameisha: Correct.
[00:26:11 – 00:27:05] Brett: But the majority of those folks are just good people that just need a little help. If you put Section 8 in your homes, a Section 8 tenant, you're just more competitive. Right? I mean, there's a ton. There's a lot of properties that are on the market currently for rent, self pay. Sometimes we get a call, we get a ton of calls from wannabe new investors that we, we qualify. But 90% of them don't pan out. But they always bring up when I talk about Section 8 and Memphis Housing, like, oh, oh, no, no, I'm not. Now this shouldn't happen. Me as an Investor, I want $1,500 a month and somebody moves in with a 1550 voucher and they're paying 550 and MHA is paying $1,000. I'd much rather have a guaranteed thousand than to take a risk every month of that person paying me 1550 out of their pocket. Right. It mitigates your risk on that investment because at least you've got enough money coming in to cover Your expenses. You may not get the balance of your cash flow, but you're getting your expenses covered. So I think MHA is a fantastic tool for investors.
[00:27:05 – 00:27:19] Jeff: Let me ask you this. Once a person is locked in and has a voucher, that's never going to run out. Like, if the government runs out of money and can't fund it. Once you're locked in, you're locked in. Right. You're never going to lose your voucher because the government ran out of money. Right.
[00:27:19 – 00:27:26] Ameisha: Not because they ran out. No. You can lose your voucher for different. For other reasons, but not because they run you in. You in the budget.
[00:27:27 – 00:27:29] Jeff: And again, you know, I had a.
[00:27:29 – 00:27:40] Ameisha: Situation some many years ago where a young lady, actually, she had the voucher. And again, sometimes when the government drops that money, it's only for a certain amount.
[00:27:40 – 00:27:40] Jeff: Right.
[00:27:41 – 00:27:55] Ameisha: So I had a young lady and she had called the news and everything, she moved in and they had to call and say, hey, they had to call her and she had to go like, above and beyond. It was crazy. And the government ended up just sending enough funds for her.
[00:27:55 – 00:27:55] Jeff: Yeah.
[00:27:55 – 00:28:02] Ameisha: Because she, we literally placed her. She was in the home and they called the landlord, was like, we have no more money. We can't pay you.
[00:28:02 – 00:28:05] Jeff: Well, that's rare. And you got it worked. And they got it worked out.
[00:28:05 – 00:28:14] Ameisha: They got it worked out. She, she got, she went to the new. She went to the governor because now she's about to be homeless. And they should have had the calculations. Right. But that was crazy.
[00:28:14 – 00:28:26] Brett: Here's some questions that Richard pulled up, I guess in the Q and A section of the research. You did some questions that are being asked. Here's one. Is Section 8 rental income guaranteed by the government? Yes. Unless the tenant loses her voucher.
[00:28:26 – 00:28:31] Ameisha: Correct. Or if the tenant doesn't do her recertification. It's little bit.
[00:28:31 – 00:28:39] Brett: How often do they do the recertification? Recertification, meaning they. To revisit their income, revisit their expenses, revisit their household. How often do they do that?
[00:28:39 – 00:28:40] Ameisha: Yearly?
[00:28:40 – 00:28:45] Brett: Oh, every year. So they have to submit that to MHA every year. And then if they don't do that, they could lose their voucher.
[00:28:45 – 00:28:51] Ameisha: Correct. And then you have tenants, me and Christine, for instance, one of the tenants on Paula's that I rented out.
[00:28:51 – 00:28:52] Jeff: Right.
[00:28:52 – 00:29:15] Ameisha: She had a tenant rent 1,700. The tenant had to pay 5. And so she was struggling a little bit, but we worked with her and then eventually, I guess her income changed. She reported it before the yearly. But what happened was MHA Went ahead and they took over the whole rent amount. So now that tenant no longer has to struggle to pay the rent.
[00:29:15 – 00:29:15] Brett: It's 100%.
[00:29:15 – 00:29:17] Ameisha: It's 100% now? Yeah.
[00:29:17 – 00:29:17] Brett: That's awesome.
[00:29:18 – 00:29:19] Ameisha: All of them are 100% now.
[00:29:21 – 00:29:26] Brett: Every dollar that comes in rent, not from the tenant is just mitigating your risk as an investor.
[00:29:26 – 00:29:33] Ameisha: We're about due. I'm going to go back and look. But in 60 days before their lease is up, now we can go in and get that rent increase.
[00:29:34 – 00:29:35] Jeff: So she ought to love that.
[00:29:35 – 00:29:36] Brett: That'll be great.
[00:29:36 – 00:29:38] Ameisha: Oh, yeah. Now we can go up to 18, 19.
[00:29:38 – 00:29:41] Jeff: So she's been pleasant with you so far. That's great.
[00:29:41 – 00:29:42] Ameisha: Smooth sailing.
[00:29:42 – 00:29:46] Jeff: Yeah. Once we got her over that initial hurdle and now she understands how it works.
[00:29:47 – 00:29:47] Ameisha: Yeah.
[00:29:47 – 00:30:28] Brett: MHA I always tell investors and anybody considered mha, MHA is like an uphill climb with your skis on your back and £2,000 and. But once you get to the top and you get going, it's pretty easy sl after that. But again, it's guaranteed money. All right, well, if you don't have any more questions for Amisha, you can reach out to us at 901-692-7401 or mymemphasinvestmentproperties.com. we'd love to hear from you. Please subscribe to our podcast. We'd love to have you as a subscriber, and you can go to our website, send us messages. If there's a topic you want us to talk about, please send us a message. We'd love to talk about something that you want to hear about. Amisha, if someone has a home here that they're trying to rent, how can they reach you?
[00:30:28 – 00:30:36] Ameisha: They can reach me at 901-616-0189. I have a website. Memphis Mobile Manager can reach out.
[00:30:37 – 00:30:38] Brett: Memphis Mobile Manager. Yep.
[00:30:38 – 00:30:41] Ameisha: My website. Find me on Facebook. Amisha Herron.
[00:30:42 – 00:30:45] Brett: You're on Facebook every time I open Facebook. Every other post is you.
[00:30:45 – 00:30:51] Ameisha: Yeah, I just go. And then like, people like, do you go to sleep? Like, no, I don't think I do.
[00:30:52 – 00:30:56] Brett: Sleep with your eyes open while you're typing on Facebook. Well, we appreciate you listening and have a great day.
[00:30:58 – 00:31:13] Production Team: For more common sense real estate tips, listen and subscribe at 5oclocksomewherepodcast.com. The 5 O'Clock Somewhere Real Estate Investor Podcast is a Sound Ideas Group production.