Am I overlooking something while in DD?
Hey BP,
I have a property under contract right now and I'm in the DD process. Since this purchase isn't as straight forward as all of my other vacant property purchases, I figured it'd be a good time to invite my "message board of directors" to chime in and provide help, guidance, and feedback.
I have contracted a property outside of the Charlotte metro area that is currently tenant-occupied, with the full $775/mo rent paid by HUD under Section 8. They have been there for 7 years and appear to have taken pretty good care of the house. In addition, the home has a newer 200A electrical service, new roof, but an old HVAC system.
I have been researching Section 8 here on BP and found my way to HUD USER and the 2020 FMR Guide for my area. The guide states that the projected FMR for a 3BR house to be $1190. Are these rates later adjusted by the local/county housing authority? Is there a way to have that value re-evaluated?
The tenants are on a month-to-month lease. I have no plans for displacing them (not my business model) but at the same time I don't want to purchase this house if it won't cash flow or doesn't make sense financially, or leave meat on the bone in terms of having the rent rates adjusted.
I have a major blindspot with the section 8 process and I'm trying to wrap my head around what my best next steps would be in order to maximize this opportunity, provide a great place to live for the tenants, and make sure I won't find myself in a trouble spot due to over looking something up front.
I look forward to and appreciate any help and guidance you guys and gals can provide
Thanks,
Jay