Location: Aroostook County, ME | Metro: Aroostook County, ME
| Unit Size | Monthly FMR |
|---|---|
| Studio | $990 |
| 1 Bedroom | $990 |
| 2 Bedrooms | $1,280 |
| 3 Bedrooms | $1,740 |
| 4 Bedrooms | $1,800 |
| 5 Bedrooms | $2,088 |
| 6 Bedrooms | $2,339 |
| 7 Bedrooms | $2,526 |
| 8 Bedrooms | $2,652 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 04750, which is actually located in Maine, not Tennessee, provides insight into potential investment opportunities for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a 2-bedroom apartment in this area, as determined by HUD for fiscal year 2026, is set at $1,410 per month. When annualized, this figure equates to an income of $16,920 per year. In contrast, the market rent based on Census ACS data stands at $800 per month, or $9,600 annually.
To calculate the implied gross yield for both scenarios, we need to compare these rental incomes to the median home value of $105,859. For the Section 8 scenario, the gross yield is calculated as follows: ($16,920 / $105,859) * 100 = 16%. This means that if a property were purchased for the median home value, the annual rental income under the Section 8 program would be approximately 16% of the purchase price. On the other hand, using the market rent figure, the gross yield is ($9,600 / $105,859) * 100 = 9%.
The disparity between these two gross yields highlights the financial benefits of participating in the Section 8 program. However, it's important to consider the practical aspects of the rental market in ZIP 04750. With a renter density of 38.8%, the demand for rental properties is significant, but it does not necessarily imply that all renters will prefer Section 8 housing over market-rate rentals. The lack of data on days on market (DOM) makes it challenging to assess how quickly properties might be rented out under either scenario. Nevertheless, the higher gross yield of 16% under the Section 8 program is compelling for those willing to navigate the administrative requirements associated with the program.
In conclusion, while the market rent scenario offers a more modest gross yield of 9%, the Section 8 program presents a significantly higher gross yield of 16%. Given the substantial renter population and the stability of government-subsidized rents, the Section 8 scenario appears more realistic for achieving a higher return on investment. However, the decision ultimately depends on the investor's willingness to comply with the program's regulations and their assessment of the local rental market dynamics.
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.