How to become a landlord
Real estate investing is one of the most common ways to make passive income – or money that rolls in without actively working a job. Flipping houses has grown in popularity as television glamorizes the process of taking a home from rags to riches. But the tight turnaround time needed to make a strong return on your investment is scary. When you then think about the price of selling a house through an agent, the attorney fees, closing costs… you might not make a ton of money out of the deal. That’s where becoming a landlord can come in. You can do a lot of the same things that go along with flipping a house and make income incrementally over time as your tenants pay you rent. It’s a win-win if you list your property as a rental through the HCV program, as there is a critical shortage of high quality, affordable rental properties available for low-income families in Memphis and Shelby County.
Purchase a property as an investment.
Step one to becoming a landlord is owning a property. While we can’t advise you on a wise purchase, we encourage you to talk with a trusted financial partner and do market research to determine how much you want to spend and which neighborhoods you should consider. If your plan is to become a landlord in the HCV program, you want to make sure that your monthly mortgage payments (if you’ll carry one) will be less than the fair-market rate for the community in which you’re buying. MHA’s team is bound by those rates through HUD, so we can’t offer rent payments above fair-market rates. Rental rates fluctuate, so connect with the MHA team to learn more about current rates.
Make repairs so it can pass an HQS inspection.
Sometimes to get a good deal you have to buy a home that needs a little tender love and care. Since you’re looking to make a profit, we know that you want to be wise with your budget. But to rent your home through the HCV program, the property has to pass a Housing Quality Standards inspection. All of the elements included here are basic home decencies that most landlords would willingly supply – like carbon monoxide detectors, safe egress from the property, working heat and functioning electrical outlets. You’ll also have to make sure that there are no urgent safety concerns, like a leaking roof, sagging floors or missing guardrails on stairs. Check out the HQS information on HUD's website to make wise decisions when repairing your property.
Apply to be part of the HCV program.
Once you’re ready to accept tenants, you can apply to be part of the HCV program. You can go about this one of two ways. First, you can get pre-approved through MHA and then list your property on one of Tennessee’s approved public housing channels. Or, you can list your property for rent and go through the HCV approval process once you’ve secured a tenant that is participating in the Housing Choice Voucher program. We usually recommend the first option because it can alleviate some of the time you spend finding the right tenant by marketing your property. If you plan to have another person manage your property, they must register with MHA. This person should be someone you know and trust – some property managers have been removed from our program for unethical practices and failing to comply with our program.
Complete needed paperwork and communicate regularly with the MHA team.
Because you’re enrolling in a formal rental program, there is more paperwork associated with the HCV program than renting in the private market. But with that paperwork comes an assurance of payment from a federally funded program and protection when renters don’t abide by their side of the agreement. When you receive paperwork as part of the HCV program, complete it quickly to keep the process moving. That will help ensure that your payments quickly start and continue coming monthly.
Want to learn more about becoming a landlord in the HCV program? Visit this page.