Looking for an edge with Section 8 Rates
I currently own a 3 family in Taunton. It is all section 8 and so far it has been a good experience. So, this year, I am looking to buy a few more properties with section 8 in mind.
That made me wonder... how do Section 8 rents vary town to town? And if I could cross reference the Section 8 rates with the median home prices in those markets, I may be able to find out which communities make for the most profitable Section 8 rentals, and get an edge.
So I started digging. Here are the section 8 rates for MA:
http://www.bostonhousing.org/es/For-Section-8-Leas...
Now, this is where I got confused. Take the rates for Wareham. According to Section 8:
3 bedroom in Wareham is $2166 per month
But according to Rent-O-Meter, a 3 bedroom in Wareham rents for $1650
https://www.rentometer.com/results/jqz2czof8mI
So... if I buy a house in Wareham, where the average rent "should be" (according to Rent-O-Meter) about $1650, can I charge more than that for Section 8? Even though the market rate is $1,650, can I list it as $2150 a month and the state will pay that much?
My understanding is that a section 8 tenants are paying a fixed percentage of their earnings, and section 8 makes up the difference. So they won't care what the top line rent is.... they only care what they have to pay. And that number should remain constant.
Median home prices are basically the same in Taunton and Wareham. If Wareham Section 8 pays out significantly more, I should really be looking at that market instead of Taunton if I am moving forward with Section 8. The same 3 bedroom in Taunton pays out roughly $1400 vs the $2150 in Wareham. A massive difference.
Any input, experience, and knowledge would be greatly appreciated. If Wareham really does pay out more, I will build a spreadsheet comparing median home prices with Section 8 rates throughout the state and share it with the community.