Section 8 investing in Chicago
There are a few things that make investing in Chicago's C and D class areas different from other cities C and D Class areas, for one is the way that our CHA Program works. Chicago Housing Authority or the CHA is the entity behind the U.S department of housing Section 8 program in Chicago, it only manages the public housing residents in Chicago and not in the suburbs that program is managed by Cook County Housing Authority and is a whole different can of worms.
What is the Housing choice voucher program?
Up until the mid 1990's Chicago had what we called the projects, high rises that were part of a poorly managed federally funded program designed to house low-income families. These public housing units had many problems, including being poorly run, but more importantly by grouping low-income families into the same neighborhoods and buildings, research showed that it increased the likelihood of the children in the units to become involved in things like gangs, and crime. you may have heard of places like O block, or the Cabrini Green homes. These areas became some of the worst areas in the city with high crime and low standards for things like neighborhood schools etc. What Chicago's Alderman learned is that it would be better to use the funds to pay a property owner to rent their units throughout the entire city, spreading the affordable housing from a few compact neighborhoods to the entire city. So after the creation of the housing choice voucher program, public housing residents had the option to rent anywhere in Chicago with private property owners. So now that voucher holders can work with third parties to find housing it means that many investors look to invest in properties for CHA tenants.
Should your real estate investment strategy be around Section 8 in Chicago?
Many investors love the peace of mind that comes with renting to Chicago Housing authority tenants, because the rent or at least the government's portion of the rent, is rarely late. However this is where Chicago differentiates from other cities that are hot spots for section 8 rentals. Because the city and state list source of income as a protected class a landlord can not deny a CHA tenant tenants with housing choice vouchers in Chicago can live in any neighborhood, and this means that the type of investment properties (c and D class) most landlords look for when investing in public housing units are not attractive to a CHA tenant. Let's say you were investing in Cleveland, Ohio, you would buy a cheaper property in a lower economic area and rent to a Section 8 tenant, no problem. In Chicago, there are not as many Section 8 tenants that desire to live in lower economic areas. This means higher vacancy rates in Chicago's south side section of town as landlords have stricter criteria for market rate tenants and their credit and income. With all that being said, many of our clients still buy properties looking to rent to low-income families, so if you do decide to go that route, let's talk about how to work with CHA to make your investment profitable.
Once you find a CHA tenant how long does it take to get them into your unit
Right now we are seeing process time to get a new cha tenant into your rental units be between 45 and 60 days from the time that you submit their moving papers.
What is the process like to get approved by CHA?
Here is the step by step process
2. submit moving papers to CHA (3 weeks)
3. Pass the cha inspections (1 to 3 weeks)
4. get rent offer and accept (1 to 2 weeks)
5. sign lease and hap agreement (1 week)
6. move in tenant ( 1 week)
7. get paid (30 to 45 days depending on monthly cycle)
Looking into investing in CHA properties? Don't do all the hard work by yourself! Chicago Style Management is the premier property manager for C and D class properties on Chicago's south side and Southern suburbs, our years of experience can make sure you don't fall into any of the pitfalls of dealing with an imperfect section 8 program to make sure you can invest in a profitable and passive investment in Chicago's south side. Learn more about the CHA payment standards here.
