HUD fair market rents-Baltimore

[Will Wagner]

So I'm looking at buying some rental properties in Baltimore and was doing some research about Section 8 and HUD etc. What exactly is fair market rent? Is that what Section 8 WILL pay me or is that the max they would pay on a property in a Metro area? Some of the houses I'm looking at would normally rent out for about $900-1000 a month but the HUD FMR is something like $1600 (for 3 bedrooms). Do I get that amount or will they only pay what would be fair for the neighborhood and type of house? Most of the threads I've seen on here are about FMR's being too low. This is a case of it being too high. This seems insanely too good to be true if I can actually get that amount. Please someone fill me in as the research I'm doing is turning up very vague answers to my question(s).

[Garrett Fulton]

Hey @Will Wagner

If you are talking about buying a rental in Baltimore city, the HUD FMRs are used as a guideline. When the home is inspected, the inspector will grade the property based on location and condition. When the case worker reviews the inspection report they will come up with a number (sometimes without too much rhyme or reason). You can dispute if you feel that the amount is too low, however this delays the lease signing as a supervisor must review.

For reference I have two fully renovated 3 bedroom properties in C- areas in the city with rents of $1351 and $1301. Both of these properties were gut rehabs ( new plumbing, electric, sheetrock , central Ac and finished basments).  I know another investor who does a minimum rehab on his rentals and his rents are a bit lower for similar 3 bedrooms (mid $1200s).

I would think that to get that top rent number, you would need to be in a premier neighborhood  in the city.