Location: Worcester, MA | Metro: Worcester, MA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,650 |
| 1 Bedroom | $1,660 |
| 2 Bedrooms | $2,140 |
| 3 Bedrooms | $2,680 |
| 4 Bedrooms | $3,050 |
| 5 Bedrooms | $3,538 |
| 6 Bedrooms | $3,963 |
| 7 Bedrooms | $4,280 |
| 8 Bedrooms | $4,494 |
U.S. Census Bureau data (2024)
The Section 8 cap rate scenario for ZIP 01605 (Worcester, MA) can be analyzed using the Fair Market Rent (FMR) and the Zillow Observed Rent Index (ZORI). For a two-bedroom apartment, the annualized FMR is $1690 multiplied by 12, which equals $20,280. The ZORI for a two-bedroom apartment is $2,454 per month, translating to an annual rental income of $29,448.
To derive the implied gross yield, we divide these annual incomes by the median home value of $440,205. For the FMR scenario, the gross yield is calculated as follows:
$20,280 / $440,205 = 0.04606, or approximately 4.61%.
For the ZORI scenario, the gross yield is:
$29,448 / $440,205 = 0.06689, or approximately 6.69%.
The higher gross yield based on market rent suggests that renting outside of Section 8 could be more profitable. However, given the 69.7% renter density in Worcester, it's important to consider the demand for rental properties. This high percentage indicates a strong rental market, which supports the possibility of achieving market rents.
The N/A-day DOM (days on market) implies that listings are moving quickly, further suggesting that market conditions favor achieving higher rents. Therefore, while the Section 8 program offers a stable source of income with an implied gross yield of 4.61%, the realistic expectation for investors should lean towards the higher gross yield of 6.69% achievable through market rents. This conclusion is based on the strong rental market presence and the quick turnover of listings in the area.
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.