Location: Penobscot County, ME | Metro: Bangor, ME HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,120 |
| 1 Bedroom | $1,190 |
| 2 Bedrooms | $1,500 |
| 3 Bedrooms | $1,920 |
| 4 Bedrooms | $2,020 |
| 5 Bedrooms | $2,343 |
| 6 Bedrooms | $2,624 |
| 7 Bedrooms | $2,834 |
| 8 Bedrooms | $2,976 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 04460 in Rhode Island provides insight into potential rental yields under government-subsidized versus market conditions.
For the subsidy scenario, using the annualized Fair Market Rent (FMR) for a two-bedroom unit at $1050, the gross yield can be calculated. However, the median home value is not available, which complicates a direct cap-rate calculation. To provide context, assume a median home value similar to nearby areas, around $250,000. The annual income from Section 8 would be $12,600 ($1050 x 12 months). With a typical down payment of 20%, the investor would need to finance approximately $200,000. Assuming a mortgage rate of 5%, the annual mortgage payment would be around $10,000. Thus, the gross yield from the Section 8 subsidy would be about 6.3% ($12,600 / $200,000).
In the market scenario, using the Census ACS reported market rent of $776 per month, the annual income would be $9,312 ($776 x 12 months). Using the same median home value assumption, the gross yield would drop to about 4.65% ($9,312 / $200,000).
The gross yield from the Section 8 subsidy is significantly higher at 6.3% compared to the market rent yield of 4.65%. This makes the Section 8 scenario more attractive for investors seeking stable, long-term rental income. Given the ZIP code's low renter density of 15.1%, it is challenging to find tenants willing to pay market rates, especially in a slow-moving market where the days on the market (DOM) are not specified but likely longer than average. Therefore, the Section 8 scenario is more realistic and offers a better return on investment.
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.