You will generally need to get about 2% of the acquisition cost (purchase price + rehab cost) each month in rent to make a rental worthwhile. So if the acquisition cost is $37,000, then you would need at least $740 rent per month.
However, you should realize that the rent is set by the market. It is also important to really understand the area before you buy. If this is a ghetto area, then the damage from the horrible tenants and vandals may not allow you to make money even with 2% of the purchase price in monthly gross rents.
I post in another group with a lot of section 8 tenants. They have eviction story after eviction story and a lot of people lying on applicaitons and such. If I was to get into that kind of landlording, I’d have to think how much I wanted to deal with that before proceeding.
Keep in mind if the market rents could be $1000/mo, the property is only $5000, and you can’t rent it the property is still negative cashflow. Some of these properties in the ghetto just won’t rent and if they do you just can’t get good tenants. If every tenant you put in needs to be evicted and the turnaround time on an eviction is 4 months and every tenant does some or a lot of damage you are going to be in a world of hurt even if you get the property for FREE. Pick your warzone wisely.
You have to figure out what the perfect zen for you is. High end properties have tenants with money and clean living habits but there is no cashflow. Extremely low end has cheap properties compared to the possible rents but the tenants are deplorable and issues with them will still cause you to lose money. You need to find your sweetspot between a mansion and a dumpster. Lower middle class blue collar people with steady jobs are probably going to be where you want to aim.
Section 8 tenants are not normally found in the Ghetto. The reasons is that Section 8 houses must pass the housing inspection. Slums will not pass the housing inspection.
I do not shy away from Section 8 rentals. They are exactly like other low income rentals. If you’re going to make money in the rental property business, then you’re going to be dealing primarily with lower income tenants. In the vast majority of places, people that are middle class own homes – they don’t rent. If you deal with low income tenants, you should expect to deal with all the problems of low income tenants. The key to being successful is to understand the business and learn to deal properly with tenants. In short, that entails being fair, but firm (like a rock). The tenant either obeys the lease (and especially pays the rent on-time) or they are evicted!