Section 8 Fair Market Rent (FMR) for ZIP 00916 - 2027

FY 2027 Fair Market Rent Rates

The analysis of the Section 8 cap-rate picture for ZIP code 00916 in Puerto Rico reveals several key points. With an annualized Fair Market Rent (FMR) for a 2-bedroom apartment at $670 per month for FY 2024, we can calculate the implied gross yield under two different scenarios.

In the first scenario, where we use the FMR for Section 8 tenants, the annual rental income would be $8,040. Given that the median home value is not available, we cannot directly calculate the cap rate. However, if we assume a property value based on typical investment properties in the area, the gross yield can still be determined. For instance, if a property were valued at $100,000, the gross yield would be 8.04%. This is calculated by dividing the annual rental income ($8,040) by the property value ($100,000).

In the second scenario, where market rents are considered, the lack of specific market rent data makes it impossible to provide a precise figure. However, the absence of market rent data suggests that the market may not be robust enough to support higher rents consistently. In such a case, the FMR scenario might be the most reliable indicator of potential rental income.

The implied gross-yield of 8.04% based on the FMR is a conservative estimate. Without market rent data, this figure serves as a baseline for what landlords can expect when participating in the Section 8 program. It's important to note that the actual gross yield could vary depending on the property's condition and location within the ZIP code.

Given the unknown percentage of renter density and the unavailability of days on market (DOM), it's challenging to assess the broader rental market dynamics. However, the conservative nature of the FMR scenario means that it is likely more realistic for investors looking to manage risk. The lack of market rent data implies that the demand for rentals may be lower, making the FMR a safer bet for steady income.

Landlords should consider the FMR of $670 per month as a stable source of income, especially since market conditions in ZIP 00916 do not appear to support higher rents. This stability can be beneficial for long-term investment planning and portfolio management.

Data Sources: FMR data from HUD (2027).

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.