You have to compare this with your required rate of return.Based on Seth's input you may be able to command more rent.Good Luck.Bill

With a 2 bed you can do many things with that space to make it still work.There are some 3 beds in the area here and I have even seen 4 beds but rare and those command a little more rent but not much versus the extra space they take up.

I would not compare what Section 8 pays to what you can command from cash paying tenants..

We live in downtown Blacksburg (Virginia) which is a college town, and as such commands fairly high rental rates and high turnover.

That leads us directly into my 3rd Commandment Of Successful Investing.

Careful with code and assess issues. 10) Create multiple units out of single units where zoning and code allows. 11) Change use of property to highest and best, ie convert warehouse to smaller self storage units or lofts. 12) Change zoning to allow higher density and more expensive use. 13) Paint and cleanup property to command higher rents. 14) Identify and rent to niche market at higher rate, ie felon friendly. 15) Convert property from long term lease to vacation rental.16) Rent to roommates individually instead of the whole property.

So lets say the very nice rehab Chris must do to command the sales he enjoys is 25k on average per house.

In this example, perhaps it's renovating the remaining units to command a higher rent. 

The neighborhood commands 3000/month for a home rental.  

Which is fine, and there's a market for that, but the area could command higher rents with >500 sqft units 1/1's.