HAP contract on 24 units?

[Phil B.]

I'm under contract on a 24 unit, independent senior housing complex. It currently has a 20 year HAP in place with an annual 1.4% rent increase. It currently has a waiting list and is a 7% cap.

Someone mentioned to me that 20 year HAP's are bad because expenses on the property will only go up (for example taxes, and if the area sees growth then presumably maintenance and repair labor will go up), and cannot raise rents enough annually to keep up with those growing expenses.

Does anyone have any insight on this? Or does anyone currently use HAP contracts as a strategy, or own independent senior housing with a HAP in place?