Location: Providence-Fall River, RI | Metro: Providence-Fall River, RI-MA HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,450 |
| 1 Bedroom | $1,540 |
| 2 Bedrooms | $1,920 |
| 3 Bedrooms | $2,350 |
| 4 Bedrooms | $2,670 |
| 5 Bedrooms | $3,097 |
| 6 Bedrooms | $3,469 |
| 7 Bedrooms | $3,747 |
| 8 Bedrooms | $3,934 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,920 | $389,888 | 0.49% | F |
| 3BR | $2,350 | $439,783 | 0.53% | F |
| 4BR | $2,670 | $471,030 | 0.57% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 02914, East Providence, RI, reveals a stark contrast between government-subsidized rental income and market rents. For a two-bedroom unit, the Fair Market Rent (FMR) set by the government for FY 2024 is $1780 per month. This translates to an annual rental income of $21,360. In comparison, the Zillow Observed Rent Index (ZORI) indicates that the market rent for a similar unit is $1,970 per month, equating to an annual rental income of $23,640.
To derive the gross yield for both scenarios, we use the median home value of $421,475. The implied gross yield based on the FMR is calculated as follows: ($21,360 / $421,475) * 100 = approximately 5.07%. Conversely, using the market rent, the gross yield is ($23,640 / $421,475) * 100 = approximately 5.61%.
The higher gross yield of 5.61% derived from market rents is more reflective of potential returns in a competitive real estate environment. However, given the 48.9% renter density in East Providence, it's important to consider the likelihood of securing tenants at market rates. The fact that the days on market (DOM) is listed as N/A suggests either a lack of recent sales data or a highly dynamic market where properties move quickly. In such conditions, achieving the higher gross yield might be challenging without significant marketing efforts or concessions.
Despite the potential for higher returns, the stability and security offered by Section 8 contracts cannot be understated. These contracts typically provide a steady stream of income, backed by federal guarantees, which can be particularly attractive in a high-renter-density area like East Providence. While the gross yield of 5.07% based on the FMR is lower, it represents a more predictable and less volatile investment option.
In conclusion, while the market rent scenario offers a more lucrative gross yield at 5.61%, the reality of tenant acquisition and market dynamics makes the Section 8 scenario, with its gross yield of 5.07%, a more practical consideration for many landlords and small-portfolio investors. The choice ultimately depends on individual risk tolerance and investment goals.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.