Juggling and staying on top of the frequently changing federal, state, and local laws that apply to rental housing is one of the trickiest tasks you’ll have to master as a property manager. At the top of the list of housing regulations you must abide by are equal housing rules and regulations as determined and enforced by the Office of Fair Housing and Equal Opportunity (FHEO). As always with rules and regulations, it’s imperative you stay on top of regulations as they’re subject to change. With that in mind, following are some basic equal opportunity housing rules and regulations that every landlord should be aware of.

The Civil Rights and Fair Housing Act mandate that landlords may not discriminate against potential tenants based on their race, color, familial status, or handicap. It’s important to note that, under the Fair Housing Act, it is illegal to refuse rent to families with small children, based on that fact. (For more information and tips for renting to families with kids, check out our previous blog post.)

The Equal Credit Opportunity Act also applies to landlords, as it makes discrimination unlawful “with respect to any aspects of a credit application on the basis of race, color, religion, national origin, sex, marital status, age, or because all or part of the applicant’s income derives from any public assistance program.”

Additional anti-discrimination rules apply to those properties that have received federal funding. For instance, under Title II of the Americans with Disabilities Act of 1990, HUD enforces anti-discrimination based on disabilities as it relates to “state and local public housing, housing assistance and housing referrals.”

Essentially, these laws all mean that you must offer people of all legal ages, races, creeds, nationalities, family types, and physical capabilities an equal shot at renting your units. This includes not establishing discriminatory terms or conditions for your rental units, denying that housing is available, or advertising that your property is only available for rent to certain types of people (for example, you cannot specify that you rent only to individuals 25 years or older). These laws also apply to third parties; for example, you may not instruct a rental agent to screen out tenants based on any of the above factors.  Also remember to check your state and local laws as they may have additional rules and regulations that must be adhered to when it comes to equal opportunity housing.

Being as clear as possible about what does and does not constitute discrimination is extremely important. It’s essential that all landlords are well versed on equal opportunity housing regulations to avoid making any sort of mistake that, despite the best of intentions, may actually constitute discriminatory behavior. Landlords that are suspected of discriminatory behavior are subject to investigation by the United States Department of Housing and Development (HUD). Should you be unclear on equal housing laws and how they apply to your situation, be sure to contact HUD for clarification.

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Section 8 is a vast topic and opinions on the issue greatly differ. To formulate your own perspective on Section 8, the best strategy is to learn as much as possible on the topic. The following Section 8-related links will help you do just that.

• Back to everyone’s favorite source, Wikipedia: the Wikipedia definition of Section 8 housing.
• You may be asking yourself, “How does Section 8 work?” These five sections answering precisely that question should make everything clearer.
• A big part of understanding Section 8 housing is understanding who qualifies for Section 8.
• The demand for Section 8 housing is much larger than the supply … which is causing many families to wait more than a year to get Section 8 housing.
• Renter beware! Don’t fall for this Section 8 hoax.

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Embarking on renting to Section 8 tenants is one of those decisions that property managers should undertake only after thoroughly researching all the implications of renting to this very specific demographic. Following are some of the primary pros and cons to consider when evaluating whether or not Section 8 rentals are for you.

Pros: Government subsidies mean that your rental income is more assured than in other cases.
Since Section 8 tenants are by nature low-income tenants, many landlords are rightfully concerned that renting to this sector will result in difficulties with rent collection or, even worse, default altogether. The truth of the matter, though, is that in many ways Section 8 rental income is among the most reliable. Under Section 8, tenants are responsible for approximately 30 percent of their rent, while the US government picks up the balance of the rental payment. This US government balance is paid directly to the property landlord.

Cons: Renting to Section 8 tenants puts your property under greater scrutiny due to government rules and regulations.
Be aware that before approving one of your units for Section 8 occupancy, the US Department of Housing and Urban Development (HUD) will determine your unit’s Fair Market Rent (FMR). Once the FMR is determined, you are obligated to cap your Section 8 unit’s rent at that rate and are not allowed to accept outside payments that will result in a rent higher than the FMR.

In addition to FMR restrictions, Section 8 properties are also subject to a full premises inspection to ensure HUD’s Housing Quality Standards are met and stringent HUD-mandated eviction rules and regulations.

Pros: Because you have access to a specific demographic, Section 8 tenants may resolve persistent vacancy issues.
In many cases, Section 8 housing wait lists are thousands of families long or, in some states, closed altogether due to over-extension. This means that there is no shortage of Section 8 families available to rent out your units. For landlords that have difficulty renting out units, Section 8 may be a great solution to generate increased rental income.

Cons: Other tenants may be somewhat hesitant to rent from a Section 8 property.
The truth of the matter is, many people associate Section 8 housing with run-down properties that cater to an undesirable demographic. Obviously, this is not necessarily true. For the most part, the proof is in the pudding. If you are concerned that Section 8 units may discourage other renters from living on your property, exert even more effort than usual into making sure that your property is top-notch. Keep all public areas of your property spic n’ span; stay current on maintenance and upkeep; put some extra effort into making your property aesthetically pleasing with landscaping and gardening; and enforce property rules and policies regarding noise and unit upkeep.

Of course, landlords of any stripe should be diligent about the issues above, but putting a little extra effort forth in this specific scenario will only work to your advantage.

As with so many other aspects of property management, gaining a good grasp on the issue at hand is 90 percent of the battle. If you are considering incorporating Section 8 rentals in your property, be sure to not only do some online research on the topic, but also talk with other landlords who rent to Section 8 tenants and address any questions you may have to the appropriate state and federal agencies.

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Determining whether or not property specialization is for you is a lot like dating; you need to really click with a specialty to begin a relationship. The following links should help you determine which specialty just might be the one for you.

• Before making your decision to focus on Section 8 housing, be sure to verse yourself on the history of Section 8.
• Now that you know the history of Section 8, you should also learn about HUD’s history.
• Visit the Low Income Housing Institute’s website to see the procedures applicants must go through to obtain a low-income rental.
• Here’s a short and sweet definition of corporate housing.
• Learn everything you need to know about student housing by reading Michael Zaransky’s Profit by Investing in Student Housing.

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Determining whether or not property specialization is for you is a lot like dating; you need to really click with a specialty to begin a relationship. The following links should help you determine which specialty just might be the one for you.

• Before making your decision to focus on Section 8 housing, be sure to verse yourself on the history of Section 8.
• Now that you know the history of Section 8, you should also learn about HUD’s history.
• Visit the Low Income Housing Institute’s website to see the procedures applicants must go through to obtain a low-income rental.
• Here’s a short and sweet definition of corporate housing.
• Learn everything you need to know about student housing by reading Michael Zaransky’s Profit by Investing in Student Housing.

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Particularly if you own a property in an urban area or near a university or center of business, many specialized tenant markets are just waiting to be captured. Specialized property management may be just the solution you’ve been looking for to decrease vacancies and guarantee steady rental income. When considering just a few of your options below, be sure that you take your property, location, property management style, and goals into consideration.

Section 8 and low-income housing
Essentially, the Section 8 program provides low-income individuals with government-assisted rent. Generally, tenants pay approximately 30 percent of a unit’s rent and the government pays the remaining balance directly to the tenant’s landlord. In such a scenario, the Department of Housing & Urban Development (HUD) will determine the unit’s fair market rate (FMR) and the landlord is not allowed to charge the tenant anything over this amount.  While it is up to you to choose whether or not to participate in Section 8, keep the following points in mind:

• You will be subject to property inspection to ensure you meet HUD’s Housing Quality Standards.
• You will not be able to charge a Section 8 tenant more than FMR.
• Regardless of your state’s laws, you cannot evict a Section 8 tenant without judicial action for eviction.

While there may be some similarities, low-income housing is not the same as Section 8. Rather than receiving rental income from the government, property owners who run low-income properties are eligible for the Low-Income Housing Tax Credit (LIHTC). But it’s important to bear in mind that these tax credits apply only if you adhere to the rules and regulations that determine who can live in your building and how much they can be charged. Not abiding by the rules that are set forth can result in a whole lot of headaches, not to mention economic loss. Despite the red tape that can come with low-income housing property management, there is a large pool of renters in need of low-income housing. If your property is in an appropriate situation, low-income property management may be a good solution for you.

Student housing
College students can be a landlord’s best friend or worst enemy. The problems with renting to students are fairly straightforward. Generally speaking, you’re dealing with younger renters (many of whom may be living on their own for the first time). With this in mind, you may be more likely to experience noise and upkeep issues. Because of the school schedule, you may also find yourself turning apartments over annually or having to deal with sub-lets during the summer months.

But there are some very real positives when it comes to renting to students as well, most of which are financial. If you are living in an area that houses a college or university, chances are you will have a more dense renting population than you would otherwise. This means that—for at least nine months out of the year—students offer a very real way to keep your vacancy levels low. Also, while students may not inherently have a lot of income (or any at all), when a parent or guardian co-signs the lease, in most cases that monthly check is just as reliable as it would be under any other circumstances.

Sure, you may have to be a bit more hands-on than you would otherwise be when it comes to running student housing. But the bottom line is, they offer a nice steady flow of income.

Corporate housing
More likely than not, managing corporate housing is fairly different from any other kind of property management you’ve done to date. First of all, you’ll be dealing with a company rather than an individual tenant. In most corporate housing situations, a company will rent out one or more rooms in a property, with the understanding that one or more of their employees or clients will occupy this space over the duration of the rental term. The way this actually works out may vary from having one stable tenant for a year at a time to having a cast of different tenants in and out on as little as a daily or weekly basis.

The good news here is that signing a lease with a corporate entity allows property managers to feel relatively secure that payment issues will be avoided. There are not necessarily downsides to this scenario, just things to consider that make this situation different from renting to an individual such as: assuming the responsibility for furnishing the unit; the potential inability to build a relationship with the tenant or screen for undesirable tenant behavior; and, in some cases, the knowledge that you will not necessarily have a tenant occupying the unit at all times to immediately alert you when repair and upkeep issues crop up.

If you are looking for ways to decrease vacancy rates and generate more income, remember: There are always ways to think outside of the box when it comes to property management. Before you undertake one of these (or any other) specialized property management endeavors, just make sure you have carefully thought out the pros and cons and are well versed on any specific tax considerations or rules and  regulations that may apply.

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