Raising rent and eventual sell to section 8 tenant.

[Krista Moreno]

I have a tenant who’s on section 8. She pays just over $300 and section 8 pays almost $900.  I’m only charging her $1200 and could probably get closer to $2000. It’s a 3/2 in central FL. She pretty much begs to not raise the rent and wants a lease for the next 4 years. Then once her car is paid off she wants to go through the section 8 program to buy my house, which I wouldn’t mind if she doesn’t low ball me because I could then invest in other properties. Should I (& how much) raise the rent. And any idea how the selling of the house to her would work and if it’s a good idea? 
Any thoughts and suggestions on the matter would be greatly appreciated. 

[Corby Goade]

You aren't doing anyone any favors by keeping her rent below market- I would suggest you get your rents up to market asap and if you are uneasy about that, it's time to find yourself a great property manager. 

This is a super common dilemma and lots of new landlords want to be nice to their tenants, but I promise you, that kindness will not be returned. You will be an evil landlord to them either now or later, it just is a matter of whether or not you lose money getting there. 

If you keep the rents artificially low, your taxes, insurance and cost of maintenance and capex will continue to rise. You'll have to raise rents eventually, and you won't get a "thanks for all of the years of discounted rent," you'll be an evil landlord at that point. 

Often after a few years in the scenario above, landlords just sell to avoid having to kick out their tenant or raise their rents significantly since they've dug a hole for themselves. When you go to sell, the new landlord will be either booting the tenant or raising rents to market. At that point, you'll also be an evil landlord. 

There's no bucket of gold at the end of this path, you lose no matter what. It's best to do the hard thing now so you are't saddled with a worse situation later. 

Also, there's no benefit to a lease longer than one year, I'd caution you against anything longer- lots of upside for your tenant, no upside for you. 

Sorry if I sound like a downer, but it's the truth. 

Best of luck!