Buying a section 8 occupied property in Chicago or in the Chicago suburbs like Country Club Hills, South Holland, or Flossmoor can be a great opportunity for your real estate portfolio but there is a lot you should know of how it works before you close.
In this article and video I will touch on knowing the process of how to transfer the tenant from being under the seller’s name with the section 8 housing authority to yours or your property manager’s name once you have closed.
Why is this process important?
- This process is important because you will not get paid from Section 8 until you have the change of ownership paperwork successfully submitted and approved.
- This process can take 30-60 days so you want to get started the day you close.
- In order to submit the Change of Ownership packet there is information like the lease, the tenant’s voucher number, and tenants contact information that you want to make sure you get from the seller in advance of closing.
- You will also need to declare where you want future rent payments sent to so if you're self managing, have your banking info ready or if you have a Property Manager then they will put their information on.
With this information you can now complete the Change Of Ownership packet and submit to the housing authority. It is important that you submit it correctly otherwise they will kick it back adding many days or weeks onto the long timeframe it already takes.
In the meantime the seller will continue to get the rent so it is important that prior to closing you arrange with the seller or the closing agents involved(including attorney’s) a way to transfer you over the next month's rent after closing. If you submit the Change of Ownership packet as soon as you close on your purchase then this should only be a one time issue the first month after you close.
Keep in mind if you are buying an occupied property that on the closing statement you should get a prorated credit of rent for the month you are closing in. For example if you close on June 15th on your new occupied investment property then the seller should be crediting you at closing 50% of June’s rent since you will legally own the property for half of the month and the seller has already collected 100% of the full month's rent.
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