According to the latest available data from the U.S. Census Bureau, 7.9% of Rockville, Maryland's population lives in poverty. Finding decent housing is a struggle for most, if not all, of these individuals.
However, there's still hope for low-income households: the Section 8 Housing Choice Voucher (HCV) Program. The federally funded subsidized housing voucher program allows renters to access quality rentals and helps them pay rent.
As a Rockville landlord, you can participate in the HCV program. However, you must first meet several Section 8 guidelines, including charging a reasonable rent.
In this guide, PMI Potomac will share insights into how Section 8 decides if you charge "reasonable" rent in Rockville, MD, so read on.
A Quick 101 on Section 8
While Section 8 is federally funded, local public housing agencies (PHAs) administer the program. In Rockville, MD, the government agency responsible for administering Section 8 is Rockville Housing Enterprises (RHE). However, the U.S. Department of Housing and Urban Development (HUD) decides whether the rent you charge is "reasonable" for voucher holders.
When you participate in Section 8, you'll receive payments from the tenant and the PHA. As HUD explains, Section 8 tenants will pay 30% of their income (monthly adjusted gross income) for rent (including utilities). The PHA will then shoulder the rest and pay you directly.
How Section 8 Decides Whether Your Rent Is Reasonable
To be reasonable under Section 8 guidelines, your rent must be within the fair market rent in Rockville, MD, or the Baltimore-Columbia-Towson Metropolitan Statistical Area (MSA). FMRs represent the 40th percentile of gross rents for typical rental units occupied by recently moved-in tenants.
For example, for the fiscal year 2024, HudUser.gov published the following Baltimore-Columbia-Townson MSA FMRs:
- One-bedroom apartment = $1,582
- Two-bedroom apartment = $1,943
- Three-bedroom apartment = $2,519
- Four-bedroom apartment = $2,849
If the rental fee you charge is considerably higher than HUD's FMRs, then under Section 8, your rent isn't reasonable. However, this doesn't automatically mean your rent is "exorbitant" in the regular market.
Tips for Ensuring You Charge Reasonable Rents
Whether you decide to participate in the HCV program or not, you must ensure your rent is reasonable; otherwise, you'll have trouble finding and retaining tenants. After all, why would renters pay more for your property if they can rent others that are similar but cost less?
One method for landlord rent calculations for "reasonableness" is researching comparable properties or comps. Comps are properties similar to yours in:
- Size
- Age
- Condition
- Number of rooms
- Location
You can find comps using rental real estate platforms like Trulia, Realtor, and Zillow. Alternatively, you can work with a property management company that offers free rental analyses.
Ready to Participate in Section 8?
Remember, for your rent to be reasonable under Section 8 guidelines, it must fall within the HUD's FMRs.
If you need more expert guidance with the rent evaluation process, establishing fair rents, and becoming a Section 8 landlord, look no further than PMI Potomac. Our owners, Matt and Susan Mangan, bring a lifetime of experience to the Rockville, MD, real estate community. Matt is also an Armed Forces veteran who served the country for 30 years, while Susan has a wealth of accounting and rental property management expertise.
So, if you're ready to rent to housing voucher tenants, we encourage you to connect with us today. We'll happily provide you with a free property analysis!
