SFR Strategy utilizing Section 8 Vouchers Exclusively
I've been in talks with a firm (4 years old) that has raised a couple of smaller closed-ended funds ($15MM and $25MM) and deployed into SFR for rent with Section 8 vouchers. They have invested in only 2 markets thus far (both rust belt major metros) with about 1000 homes under management. 12-13% cash on cash average, with expected 5-7 year IRRs in the high teens/low 20s.
I guess the SFR with the voucher is a bit of a twist compared to firms strictly doing SFR, I am trying to poke some holes in their business strategy and outside of achieving real scale and dealing with the typical pitfalls of being a section 8 LL, is there anything else I should be cognizant of in terms of what types of cons come with the business strategy?