Starting with a Significant Rehab, Section 8?

[Jeff G.]

I live in one of those "if it moves, tax it" kind of states. For homes in the thousand or so square foot range, it's quite common to pay more per month on your property taxes than your actual mortgage. Also, the population is starting to shrink just a bit. I think it's mostly the taxes and cost of living, but I expect this trend to accelerate as the older segments of the population migrate to Florida and the like. So, I think it's adventitious for me to try to buy in a state that is increasing in population or at least mostly holding steady.

So, that's criteria one. My next criteria is a three bedroom house that can accommodate a fourth bedroom, most likely in the basement. Section 8 payouts are tied to family size and bedroom count. I'm attracted to the idea of buying a three bedroom property, adding a fully legit basement bedroom, and placing a Section 8 tenant in the property who has a four bedroom voucher. In many markets, this seems to virtually guarantee above market rent.

All that said, markets shift. I want to be absolutely sure any prospective properties would cash-flow at market rates. This will keep me flexible with respect to my tenant pool.

Fully finishing a basement and adding a bedroom strikes me as a full gut rehab in miniature. That may mean it would be challenging first project, especially remotely. Everything has a learning curve, even real estate. I'm very open to suggestions as to how I can wrap my head around this and which States work well for this kind of thing.

These would definitely be a BRRRR acquisitions. Is anyone here doing this kind of thing remotely at this level? Was it your first (or a very early) project? What's the best way to put a plan together given the current, relatively frozen, state of the market?