Pros and Cons Of Tenants Receiving Vouchers

Pros and Cons Of Tenants Receiving Vouchers
While there are properties that focus exclusively on affordable housing, most properties are mixed use. They include a minority of tenants who are helped with their rent through a voucher system. The most common system being Section 8. Vouchers can cover anywhere from 10-100% of the rent and varies with the tenants income

Like all decisions there are pros and cons and depending on the property, the pros and cons can make a big difference in property profitability.

The obvious pro is guaranteed income.
The obvious con is usually the clientele.

Lets organize the pros and cons using the 4 Pillars of Multifamily Profitability.

Optimized rent
Pros:
- Receive market rent
- Possible to receive higher average rents in a property
Cons: 
- Takes time to get started with vouchers
- There is a lot of paperwork

Occupancy
Pros: 
- Helps to improve economic occupancy
- There are many applicants
- Tenant retention is high as they stay longer
- With problematic tenants, the voucher supplier may help to resolve issues.
Cons: 
- Takes up to 6 weeks for approval and move in
- Some of the demographic is turbulent
- When the tenant is turbulent, they can effect tenant satisfaction
- Some places do not give the landlord a choice in accepting vouchers
- There is a lot of paperwork

Delinquency
Pro: 
- The voucher is always paid on time and has no delinquency
Cons: 
- Sometimes payments are a little late on the move-in rent, (but they always catch up)
- Some tenants do not pay their portion
- Tenants receiving vouchers are harder to evict
- If the yearly inspection identifies a problem, the unit can go into abatement and the payment are delayed
- There is a lot of paperwork

Operational Cost
Pros: 
- Less turning of apartments
- Less need for amenities 
Cons: 
- Many times the units are not maintained and are more expensive to turn
- Tenant complaints to the voucher officials can get tedious
- Yearly inspection frequently have nitpicks creating a significant number of workorders
- There is a lot of paperwork

When accepting vouchers make sure
a) you have a process in place
b) the process is managed by someone with patience, and
c) the person loves doing paperwork.