Location: San Germán, PR | Metro: San Germán, PR HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $430 |
| 1 Bedroom | $430 |
| 2 Bedrooms | $550 |
| 3 Bedrooms | $690 |
| 4 Bedrooms | $720 |
| 5 Bedrooms | $835 |
| 6 Bedrooms | $935 |
| 7 Bedrooms | $1,010 |
| 8 Bedrooms | $1,061 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 00637, which is located in Puerto Rico and not California as initially stated, reveals some interesting insights into the potential performance of rental properties under Section 8 programs versus market rents.
The Fair Market Rent (FMR) for a two-bedroom apartment in ZIP 00637 for fiscal year 2024 is set at $530 per month. When annualized, this translates to an annual rent of $6,360. The median market rent for a similar unit, based on Census ACS data, is $465 per month, which annualizes to $5,580.
Given that the median home value for ZIP 00637 is not available, we cannot calculate a precise cap rate. However, we can still provide a general assessment of the gross yields based on the available rental data. For the purposes of this analysis, let's assume a median home value of $100,000, which is a reasonable estimate for many areas in Puerto Rico where data is sparse.
The gross yield under Section 8 would be approximately 6.36% ($6,360 / $100,000), while the gross yield for market rents would be around 5.58% ($5,580 / $100,000).
Considering the 23.8% renter density in ZIP 00637, it suggests a relatively low demand for rentals compared to owner-occupied homes. However, the lack of data on Days on Market (DOM) makes it difficult to assess how quickly rental units might turn over. Despite this, the higher gross yield offered by Section 8 contracts could be attractive to landlords and small-portfolio investors who seek stable, government-backed income streams.
In conclusion, the implied gross yield under Section 8 is higher at 6.36% compared to the market rent gross yield of 5.58%. Given the lower renter density, Section 8 participation may be more advantageous for ensuring steady cash flow and reducing vacancy risk. However, the decision should also consider the administrative requirements and potential limitations of Section 8 tenancy.
Data Sources: FMR data from HUD (2027). Demographics from U.S. Census (2024).
About FMR: Fair Market Rent (FMR) is used to determine payment standards for the Section 8 Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, and rent ceilings for HOME Investment Partnerships.