Location: Newport-Middleton-Portsmouth, RI | Metro: Newport-Middleton-Portsmouth, RI HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,850 |
| 1 Bedroom | $1,860 |
| 2 Bedrooms | $2,430 |
| 3 Bedrooms | $3,230 |
| 4 Bedrooms | $3,860 |
| 5 Bedrooms | $4,478 |
| 6 Bedrooms | $5,015 |
| 7 Bedrooms | $5,416 |
| 8 Bedrooms | $5,687 |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 02871, which encompasses Portsmouth, Rhode Island, is centered around the discrepancy between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR stands at $2550, while the market rent, measured by Zillow's ZORI index, is $3041. This represents a gap of $491, or approximately 19.3%, where the market rent exceeds the FMR.
The cost of housing voucher tenants below open-market rates becomes a critical consideration for landlords and small-portfolio investors. In Portsmouth, with a median home value of $675,456 and a median income of $116,831, the rental market is relatively affluent. However, only 19.5% of residents are renters, indicating a smaller pool of potential voucher tenants relative to homeowners.
The financial impact of accepting Section 8 tenants can be significant. Landlords must weigh the guaranteed monthly rent payment against the lower rate compared to market conditions. Despite the gap, the steady income provided by the Housing Choice Voucher program can still offer a solid yield, especially when considering the low vacancy rate typical in such a desirable location. Moreover, the stability of government-backed payments can offset risks associated with tenant turnover and non-payment.
In conclusion, while the FMR is lower than the market rent, the benefits of a stable, government-guaranteed income stream and the appeal of Portsmouth's rental market can still make Section 8 properties an attractive investment. The analysis should focus on the balance between the guaranteed income and the potential for higher yields in a competitive rental environment.
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.