Buying first section 8 multifamily - 8 units in Gary, IN

[Bassim Audi]

Good afternoon! 

I am currently vetting out an 8-unit apartment building in Gary, IN and the prelim numbers look good. All the units are rented with long time occupants and all are Section 8. The majority of the rents are under market, for example the only 3-unit is renting for less than a studio. I believe all of the tenants are on a month to month and do not have a lease at the moment. 

What kind of process do I look at to get the rents up to market value and what do I need to know in dealing with the GHA. I want to keep the building Section 8 and keep the occupants happy, but need signed leases at market value. 

Any information or experiences you've had in this area would be greatly appreciated! 

Thanks in advance for your time. 

[Canesha Edwards]

@Bassim Audi

@Bassim Audi

Couple of things to keep in mind. While section 8 properties are good properties there are a few risk you should consider before buying.

1. A lot of section 8 renters have more than likely been negatively by the pandemic. Who knows what their financial situation is like currently. Also, get familiar with current eviction memorandums around Section 8 and in your area. This could deter your plan to get rid of tenants and raise rents at least for the time being.

2. It’s also concerning that a lot of the tenants are on month to month leases. I would dig further into this. How many are on month to month and what is the actual income being collected at this time. Why are the tenant not resigning ? Just because the property is occupied doesn’t mean the owner is collecting rents for all units. Has the owner provide bank statements? T-12? Make your offer on income that is being collected today, not on the basis of anything else.

3. The other question is what renovations are needed to raise rents and how much can rents actually be raised?

These are just a couple of questions so would consider if I were in your position.

Feel free to reach out out with any questions.

Best,

Canesha