Back at the beginning of the Coronavirus crisis, my spirit was telling me Section 8 was going to be the way to go. Well, as it’s panned out, the government is still printing money and funding the Housing Authorities coast to coast. Yes, we’re having some challenges with private pay tenants as well as lease option buyers so renting to tenants where the government subsidizes a portion of the rent will be a stable way to go.
In our last article, we started to itemize the things in your house the inspector will look for during her move-in inspection. This is one of the MOST important parts of the process. You can’t start getting paid until you pass this inspection so treat it with some vigilance & integrity. I’m being very thorough with this so let’s continue with the moving parts of what the inspector will fail you on:
WALLS/PAINT
From my experience, the inspectors like your unit to be freshly painted. Even if the paint is in great condition, I’d at least paint one wall to match so she can smell it when she arrives. You must go over every wall to make sure there are no holes or cracks in the paint or sheetrock. Check the molding around the windows, floors and doors as that likes to crack over time as well. I want to reiterate to verify you don’t have any cracked or chipped paint anywhere, you will fail. I have the entire unit painted when the tenant moves out so there’s no questions. I use antique white and I paint the molding & ceiling the same color so I don’t waste time trying to cut in white. That’s what really takes up the most time. Using one color has been a life saver.
SMOKE DETECTORS
You must have smoke detectors in every room. If the existing ones are hard wired and don’t work, a simple fix is to buy the $8 Lowes brand and install it in the same room. Leave the broken one as well. You only need to have the battery operated ones to pass. But make sure you check them before the inspection.
APPLIANCES
They must work and be in good condition and must be CLEAN. Sometimes you’ll have scrapes or scratched on the fridge or stove. If it’s white or black, they sell “appliance paint” at Lowes in the small spray can. You can spray directly over the scratch and it looks brand new. I’ve done this several times, it looks amazing.
Verify all the burners & the oven works. Sometimes one of the burners can go out and you’ll fail if any of them are broken. Make sure you degrease inside the stove as it can get nasty. If there’s burned grease inside the door glass, you can open the door to clean it. Here’s a pic what that looks like, because I had no idea you could open the oven door. Just remove the small screws above the door handle to gain access to the glass(see example).
Check the seal around the fridge to verify it closes properly and the handles are tight. The hood should have a new filter and light and must work properly as well. The unit isn’t required to have washer/dryer but if it’s there, it must work. I recommend letting the tenant bring their own W/D so that’s one less thing you’ll have to worry about. I’ve failed several times over the washer machine not working properly. I just took it out so that won’t even be an issue.
STAIRS
If you have outside stairs coming in the house, make sure they’re in good condition. If they’re made out of cement, sometimes they can crack. If they’re wood, make sure they don’t move when you step on them. You also may need to have a handrail. Sometimes city codes miss this during construction or codes change over time and stairs that didn’t require a handrail years ago, are now required.
From what I’ve seen, if you have over 3 steps then you need a hand rail. This will differ in all municipalities. But if you need a handrail, make sure it’s sturdy and doesn’t shake. The same goes for inside the house so don’t miss this. Over time handrails leading up to a 2nd floor can get loose, so verify it’s attached to the wall tightly. Make sure you feel every step as you’ll be surprised how easily stairs can become loose and present a stepping hazard. If a stair is loose, it’s an easy fix with nails and some strong adhesive.
HVAC
Turn your unit on and verify both heating and air are working. Let it run to make sure it gets to an acceptable temperature. If it’s winter, the inspector may not check the air conditioning but they will check the heat in the Summer. Make the house good and cool before they arrive. If you think it’s not getting hot or cold enough, you may want to get it checked. Usually the inspector will hold her hand over the air coming out the vents to feel the temperature. If there’s any question or if she can’t determine if it’s hot or cold enough, she will pull out an infrared thermometer to check it. It’s best to feel the heat and air before they arrive so there’s no question it works great. The more things you have working when they arrive, the less picky they’ll be.
Make sure you have a clean filter in the return. They will fail you for a dirty one. Replace your vent covers if they’re old and rusty. Over time the moisture in the air conditioning can rust out the covers so replace them if needed. They’re inexpensive and make the rooms look great. Make sure there’s no vegetation touching or close to the outside units. Sometimes weeds and bushes grow around heat pumps so trim them all back. Verify the insulation over your copper lines are in good condition. Over time, these coverings will deteriorate, which isn’t a big issue, but the inspectors will fail you if your copper is exposed. It’s a small fix, just go to Lowes and purchase a pre-cut piece and slide it over the copper line-set. It’ll take you all of 10 mins.
HOT WATER HEATER
This is one I forget sometimes so make sure you do a thorough inspection of it. The water heater must have the pressure relief valve attached. This is the 1 inch line that goes down the side to the floor(See picture).
You can release & check the temperature of the water with this valve. If you don’t have it attached, you can simply get an adaptor from Lowes to easily install it. The line does NOT have to be copper. They sell short pieces of PVC and you can cut it to length. Verify what your city code is but I’d say you’ll be good if it reaches to about 6 inches from the ground. Next, they may or may not check this, but you might want to wrap a piece of insulation over the hot line coming from the water heater. Some cities require it and some don’t so you can decide. Check the water heater for leaks at any of the fittings & around the base. Also check for rust and wipe it down for dust. Your hot water heater is now ready for inspection. You can get a 4 page detailed Pre-Inspection checklist with The Landlord’s Guide to Section 8 Housing.
GOOD & CLEAN CONDITION
I know all this stuff seems like a lot to get ready for your inspection. Believe it or not, I’ve been doing this since 2007 & I still fail from time to time. The #1 thing I’ve heard oh so many times from the inspectors as I’m walking through the dozens of houses I’ve done with them is “good & clean condition”. There have been times when I passed all my repair items, nothing needed to be fixed, the inspector was happy but my unit simply needed to be cleaned. I’ll go over a few things the inspectors failed me for simply because it was dirty.
Get a wet rag and clean all the window seals and sashes. Over time dust and dirt accumulates here & it’s a quick fix. Open the windows and wipe down the inside and the outside of the bottom and the frame. Open every drawer in the house, kitchen & bathroom. You can pull them out to make sure all debris is removed and use a wet rag to wipe them down. She doesn’t want any crumbs, dust, hair, grease or dirt inside the drawers. Use your wet rag to wipe down every kitchen cabinet and vanity. Don’t leave anything inside these so when she runs her hands on the shelve, it comes back clean. Wipe down the cabinet faces as well so there’s no dirt on the front or inside where your hands open and close. Wipe down all appliances. If you have a ceramic top range, use the “Easy off” degreaser to get it looking like new.
Sweep & vacuum the floors very good so there’s no noticeable debris present. I use long hair carpet in my rentals, it hides a lot of dirt. Wipe down ALL light fixtures and fans. She will run her hand over fan blades to check so make sure all the dust is cleaned off. Clean all window blinds and at the top of the window and door casing. Make sure you wipe down inside and on top of the medicine cabinet as well, it will get dusty over time. Wipe on top of the water heater as well as the air handler if it’s accessible. If you have a glass sliding door, make sure you clean the track out where the wheels engage. It likes to hold dirt too. I can’t stress cleaning enough as your inspector wants it looking good when their tenant moves in.
Periodically, HUD likes to do a follow up inspection after the initial inspection so your inspector must have the unit in good condition or risk a problem with his job. This is why they can be a bit more picky at times. Over time, if you try to make your units “inspection ready” before the inspector arrives, you’ll create a relationship with them and they’ll smile when they see you at the house when they pull up. Eventually, they’ll start to cut you some slack when it comes to some of the repairs. I’ve had inspectors find several items that needed to be fixed at my houses. They will (sometimes) allow me to pass based giving them my word that I’ll fix the problem before the tenant moves in. This is what you’re looking for, but just like antique furniture, this type of relationship takes time. It’s wonderful to hear the inspectors tell me how much they enjoy coming to my houses because they know I’m not trying to cover things up. Don’t get a reputation for being a person of low integrity, it’ll follow you everywhere you go. Let this be a time where your business acumen gets to shine, and your house will take care of you for years to come.
THE CONTRACT
Now let’s go over the “Request for Tenancy Approval” & HAP (Housing Assistance Payment) contract. You’ll be able to follow along with this example. You have a great prospective tenant IF they already have their “Request for Tenancy Approval” packet. It’s a 5-6 page packet that you fill out AFTER you’ve approved them to move in. It covers many details about the house; beds, baths, square footage, year built etc. etc.. But the main thing you must remember when filling this doc out is to specify who’s responsible for what expense.
The Housing department needs to calculate an approximate amount their tenant will be paying each month in utilities. They need this info so they can add it to the monthly rent verifying how much the tenant can actually afford to pay. In this section, make sure to put as many financial responsibilities on the tenant so it won’t hurt your cashflow. Notice every utility is to be paid by the tenant. The only thing I’m paying for on this one is the fridge and micro.
There will be times when the Housing dept. calculates all the utilities up, usually it’s approx.. $250, and they’ll say the tenant is over budget and can’t afford to live here. If the rent is $800, and the utilities are $250 totaling $1,050 but the tenant’s voucher only pays $950 total including utilities, then you have an issue. You’ll have a few decisions to make, which I’ve had to make several times.
- You can chose not to rent to this person. But remember your place is still sitting vacant and you’ve approved a tenant you love already.
- You can agree to lower the rent to make the place affordable enough to pass the Housing dept’s budget.
- You can agree to pay one of the utilities on behalf of the tenant lowering the amount they’re responsible for. Keep in mind this can be renegotiated at a later time.
- You can decline this tenant and wait for a tenant with a higher voucher price.
I won’t be mad at you for either one, but for me I try as much as I can to make this work. Yes, cashflow is very important. However, a great tenant with a voucher ready to go is an extremely valuable asset, even if it’s lower than you expected.
I have one now where the rent I wanted was $1,100. After I filled out the “Request for Tenancy Approval”, the specialist called informing me the numbers didn’t work. She further told me if I lowered my rent to $975, she could make those numbers work. For me, I don’t live off my rents alone and think about another month of mortgage payments. That will add up to the $125 a month I’m losing from lowering the rents anyway. I took the $975. You have the list example here to view. You see I push as much as I can onto the tenant, and I recommend you do as well.
