Location: Merrimack County, NH | Metro: Merrimack County, NH
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,500 |
| 1 Bedroom | $1,640 |
| 2 Bedrooms | $2,150 |
| 3 Bedrooms | $2,870 |
| 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 analysis of the Section 8 cap-rate picture for ZIP code 03255 in Newbury, NH, reveals a challenging scenario for potential investors. The Fair Market Rent (FMR) for a 2-bedroom unit in the metro area for fiscal year 2026 is set at $2,250 annually. Given the median home value in Newbury is $591,404, the implied gross yield from the FMR can be calculated.
To derive the gross yield, we first need to annualize the FMR. At $2,250 per month, the annual rent would be $27,000. Dividing this by the median home value gives us an implied gross yield of approximately 4.56%. This calculation assumes that the property can be rented out at the maximum allowable FMR for Section 8 tenants.
In contrast, when considering the market rent, which is listed as N/A, the situation becomes less clear. Without specific market rent data, it's impossible to calculate a precise gross yield. However, it's important to note that market rents typically exceed Section 8 rates, potentially offering a higher gross yield if the property could be rented outside of the Section 8 program.
The 12.4% renter density in Newbury suggests that while there is a significant portion of the population renting, the majority of residents are homeowners. This implies that demand for rental properties, including those under the Section 8 program, might be limited. Additionally, the lack of data on Days on Market (DOM) indicates that either the market is stable, or there isn't enough transactional data to provide a reliable figure.
Given these factors, the Section 8 gross yield of 4.56% is a conservative estimate. While it provides a steady income stream due to government subsidies, it may not be as attractive as market-rate rentals. For small-portfolio investors, the decision should balance the security of Section 8 tenancy against the potential for higher returns from market-rate rentals, though the latter would require a deeper dive into local rental trends and vacancy rates.
In conclusion, while the Section 8 program offers a predictable 4.56% gross yield, the absence of market rent data makes a direct comparison difficult. Investors must weigh the benefits of guaranteed rent against the uncertainties of the local rental market.
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.