Rental Covenants - Income & Rent Restrictions

[Jamie Barton]

The covenants limit income for tenants to 80% of the median income of the area which means that I could only rent to people making less than $36,000/year. It also caps rents. The current rent cap is about $940. The units are currently rented for $795 each. The most I could get based on market rents may be around $840. These covenants are active for 20 years. If I were to sell the property prior to 20 years and the buyer did not want to honor them, I would have to give the housing authority a piece of my profit. The units were just re-done completely and are 100% occupied. I just wanted to know if anyone was familiar with something like this. It has me on the fence about pulling the trigger on this deal.