Update
We closed on the duplex January 8 (same day that I was set to have emergency eye surgery, but that's another story). I had a solid contact from IHA that really helped me navigate the Section 8 process. We decided to manage the property ourselves, I wanted to make sure the tenant relations were handled how I saw fit and things have seemed to go smoothly in that regard. I was a little slower having a conversation with tenants than I normally would be due to the surgery recovery process, but we collected January rent at closing so I had a bit of cushion. I met with tenants the week following closing without having all the answers, but told them we would keep them as long as were able to raise rent basically. I had them sign a lease addendum to their current lease that stated we would maintain their month to month status/current lease terms and found out I needed tenants to sign a rent raise request (which they did willingly) that I submitted to IHA a couple weeks back. I just signed the HAP contract for the year last week that began February 1 and will continue for 12 months (1st contract has to be 12 month period, but you do not have to sign a full year lease with tenants), so waiting on February check to be deposited. We applied to have rents raised from 700 (tenant pays water/sewer) to 850 and 765 (landlord pays water/sewer) to 900 which appears to be in line with what is considered fair market rent on the IHA website. If rent raise gets accepted, I'll have them sign a year lease at that rate. If not, I'm unsure exactly how I'll proceed, but it was made clear to tenants that if I can't get rents raised that I can't keep them and they both appeared to be understanding (they assumed I was kicking them out to flip the house because of all the renovations on the block so they were appreciative I was trying to keep them there). I'll have to go through an inspection, but I can't imagine they'll be able to pick the place apart too much since tenants have been living there for 2 and 4 years and are supposed to have yearly inspections, but I guess we'll find out.
Another important piece of information that @Harvey Levin provided is that tenants get vouchers based on how many family members they have living with them. In my case, both tenants have 1 child, so even though they are 3 bedroom units I can't get the 3 bedroom fair market value rent rates. Basically, we're willing to accept that in the short term (if we're able to raise rents of course) because of the savings on turnover costs/repairs and we'd rather focus on finding another property since we had to sign a year HAP contract anyway to accept any payments in the interim.
Thanks for all the help and advice, it seems as if some people think everybody should already know everything about every aspect of rental property investing. I learn best when I jump into situations and problem solve when issues arise, but I don't feel like I've made any tragic mistakes or have overstepped my bounds to this point. I could sit around and read message boards and books all day, but there's no substitution for experience (which you can't get in rental property investing without risk). I've read numerous books and rarely have come across any information relating to section 8 housing (and even those snippets haven't been terribly helpful or accurate). Not 100% sure how it will all play out, but I'm glad I bought the place (as of now) regardless, tenants are friendly and I think if I need them to leave we won't have any major issues as long as everything is managed well. IMO the education itself is worth the risk this early in my investing career, I've learned a lot about section 8 and have a pretty solid idea of how the system works now. Plus, in these unsure times it's hard to beat sure rent. I appreciate the positive and constructive advice, I'll keep those that are interested updated on rent raise request status and inspection, both of which I'm a little nervous about.
