Buying 4Plex with Section 8 Tenant in Newark, NJ

[Clifford Charles]

I am in the process of purchasing a 4 unit in Newark, NJ. All tenants are month to month and section8. Tenants are nice but are paying below market rent *(1100) while average rent for 2br going for 1350. Any idea on how I might be able to go around bringing rent closer to FMR without the tenants turnover. I know section8 would typically allowed 4 -5% annual increase but not sure as a new owner if I can go above that since the tenants are currently residing in the units. Any insights will be greatly appreciated.

[Jennifer Donley]

@Clifford Charles Congrats on the purchase.  I only do Section 8 rentals in the St. Louis area and love Section 8.  

Every Housing authority operates differently so I think your plan is good.  Also, here, our HAs are easiest to contact by email.  They won't take anyone in their offices anymore even if we wanted to schedule an appointment.

I obviously know nothing about your HA but I work with 2 here and the name of the game when it comes to rent increases is to Shoot The Moon.  They don't have rules around a maximum per year, they are only checking to see if the requested rent is "reasonable" for the area based on other rents in the area.  And in general, they give us as much as they can up to how much was asked.  So for instance, if they could give $1000 in rent based on the rent reasonableness test (comps) but I only ask for $950, I'm getting $950.   So I figure if I get the rent I asked for on an increase, I didn't ask enough.

Good luck!