24 Unit multi-family, huge disparity between Section 8 and going rent..

[Zachary Lowe]

I'm looking at a 24 Unit being sold by the local Urban Development. The listing states that the rent is 275/unit.... All units are one bedroom which according to HUD Fair Market Rent is 528.00. I haven't talked to anyone that deals with the property yet, just internet searching information, but I am totally confused by this. Gross is listed as 79,200/ net 59,200 (listings numbers, not mine for sure, but still....) Even if landlord paid all utilities the gross should be 152,064 at Section 8.

Asking price 299k/ last sold 2013 for 170k 

Any thoughts on what may be going on here?  I can't figure out how to accurately do an analysis due to the fact the numbers aren't making sense to me.

Don't destroy me too badly for posting the question without contacting the sellers yet to solve some of the question. I'm actually too confused to attempt talking to anyone who may potentially be involved in this deal to open my mouth.  

[Bradley Bogdan]

Without knowing the area, tough to make too much of an informed guess. I'll say my gut would lead me to guess one of two things:

-Its a very depressed area and this is a tax credit complex (or similar subsidy) where the rents are fixed at a % of Area Median Income (AMI) rather than open market rents

-Its such a crappy area that you're only able to attract the lowest of the low income folks: not anyone with a voucher, but the folks on straight SSI (no SSDI) for a reasonable proportion of their income. 

A thought: remember FMRs are set at 40 or 50th percentile of rents for the area calculated. That means there are units well lower than the FMR in the area. That seems to be your complex. Also remember, as I'm sure you do, that sometimes those basement rents are deserved.