Their ability to recover their money should you default is much lower in this position.

In a market like this where properties are sitting a bit longer, buyer demand is kind of stagnant, many appraisals have been coming in lower than anticipated.

There are some zip codes where you can indeed get above market rent with S8 (even after deducting utility allowance), but some where they are lower.

In general higher cost neighborhoods are safer than lower cost neighborhoods.

There is a ton of fix and flip going on in Brooklyn and I am trying to work my confidence towards that after my first project at a lower price point around 300K somewhere (CT seems like my only option). 

Typically lenders will use the total rent being collect or the market rent given on your appraisal, which ever is lower.

There's usually a good reason why the entry points are lower.

Hi Daniel, Columbus GA has properties much lower in price than the metro Atlanta area, you should do fine to learn your local market.

that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases:Class A Properties:Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Vacancy Est: Historically 10%, 5% the more recent norm.Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.Class B Properties:Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 yearsClass C Properties:Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation.

If you're using a DSCR loan to purchase the home, most lenders use the lower of the lease agreement or 100% of the market rent from the appraisal form 1007 to determine the DSCR.