Section 8 Fair Market Rent (FMR) for ZIP 02345 - 2027

FY 2027 Fair Market Rent Rates

The analysis of the Section 8 cap-rate scenario for ZIP code 02345 in Massachusetts reveals some limitations due to incomplete data. However, we can still provide a basic framework using the available information.

The Fair Market Rent (FMR) for a 2-bedroom apartment in ZIP 02345 for fiscal year 2024 is set at an annual rate of $2380. This figure represents the government subsidy that a landlord would receive per unit under the Section 8 program. Given the median home value is currently not available, it's challenging to derive an exact cap-rate. Nevertheless, we can calculate the implied gross yield based on the FMR alone.

The implied gross yield from the Section 8 program can be estimated by dividing the annual rental income by the property value. Without the median home value, let’s assume a hypothetical median home value of $300,000 for illustrative purposes. In this case, the implied gross yield would be approximately 0.79%. This calculation is based on the following formula:

(Annual FMR / Median Home Value) * 100 = Gross Yield

(2380 / 300,000) * 100 = 0.79%

It should be noted that the actual market rent is not available, which complicates a direct comparison between the Section 8 gross yield and the potential gross yield from market rents. If the market rent were higher, say $15,000 annually, the implied gross yield would be significantly higher at 5%.

(15,000 / 300,000) * 100 = 5%

The lack of specific data on renter density and days on market (DOM) further limits the depth of our analysis. However, it's clear that the gross yield from market rents would be substantially higher than the Section 8 gross yield if the assumed market rent holds true. The higher gross yield from market rents suggests a more lucrative opportunity for landlords and small-portfolio investors, assuming they can find tenants willing to pay those rates.

In conclusion, while the exact cap-rate cannot be determined without the median home value, the implied gross yields offer a comparative perspective. The Section 8 gross yield at 0.79% is considerably lower than a potential market rent gross yield of 5%. Investors should consider these gross yields when evaluating the relative attractiveness of Section 8 versus market rents in ZIP 02345.

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.