Location: Burlington-South Burlington, VT | Metro: Burlington-South Burlington, VT MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,580 |
| 1 Bedroom | $1,750 |
| 2 Bedrooms | $2,200 |
| 3 Bedrooms | $2,780 |
| 4 Bedrooms | $2,890 |
| 5 Bedrooms | $3,352 |
| 6 Bedrooms | $3,754 |
| 7 Bedrooms | $4,054 |
| 8 Bedrooms | $4,257 |
U.S. Census Bureau data (2024)
If a landlord is considering purchasing a property in ZIP code 05468 for Section 8 investment, they must evaluate several factors:
1. Does the Fair Market Rent (FMR) of $1900 cover the debt service on a property valued at $447,649?
Yes: The FMR of $1900 is the maximum amount that a Section 8 tenant can pay towards their rent. To determine if this clears the debt service, we need to calculate the expected monthly mortgage payment based on the property value. Assuming a typical mortgage rate of around 4%, the monthly principal and interest payment on a $447,649 loan would be approximately $2,178. This exceeds the FMR, meaning that even with the full FMR contribution, the landlord would still need to subsidize the difference.
No: The FMR does not fully cover the debt service, which means the landlord would have to either find additional sources of income or accept a subsidy on the property.
It Depends: The answer hinges on the specifics of the mortgage terms, including the interest rate and any other costs associated with the property. However, based on standard rates, the FMR of $1900 is insufficient to cover the debt service alone.
2. Is the market rent of $1,547 above, at, or below the FMR?
Below: The market rent of $1,547 is lower than the FMR of $1900, indicating that the Section 8 program pays more than what the market would typically bear. This could be beneficial for landlords as it offers a higher guaranteed income compared to the market rent.
At or Above: Not applicable in this case since the market rent is below the FMR.
3. Are there enough demand signals to justify the purchase?
Yes: With 11.3% of the population being renters, there is a steady demand for rental properties. However, the lack of data on days on the market (DOM) makes it difficult to assess how quickly properties are rented out. Landlords should consider this when deciding whether to proceed with a purchase.
No: Not applicable given the current percentage of renters. The question arises more when the percentage is significantly low.
It Depends: While the 11.3% renter statistic suggests there is some demand, the absence of DOM data leaves uncertainty about the speed at which units are occupied. Landlords should also investigate local vacancy rates and trends to make an informed decision.
In conclusion, purchasing a property in ZIP 05468 for Section 8 purposes requires careful consideration of the financials and market conditions. The FMR does not cover the debt service on a $447,649 property, and while the market rent is lower than the FMR, the demand signal is mixed due to the missing DOM data. A landlord should weigh these factors against their investment goals and risk tolerance.
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.