Location: Addison County, VT | Metro: Burlington-South Burlington, VT MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,350 |
| 1 Bedroom | $1,490 |
| 2 Bedrooms | $1,930 |
| 3 Bedrooms | $2,480 |
| 4 Bedrooms | $2,840 |
| 5 Bedrooms | $3,294 |
| 6 Bedrooms | $3,689 |
| 7 Bedrooms | $3,984 |
| 8 Bedrooms | $4,183 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 05487 reveals significant differences between using the Fair Market Rent (FMR) and the actual market rent figures. The FMR for a 2-bedroom apartment in this area for FY 2024 is set at $1770 per month, while the Census ACS indicates a market rent of $1,306 per month.
To calculate the gross yield, we annualize these figures and compare them to the median home value of $408,581. Using the FMR, the annualized rent would be $21,240, leading to a gross yield of approximately 5.2%. On the other hand, applying the market rent figure yields an annual rent of $15,672, resulting in a gross yield of around 3.8%.
The gross yield based on FMR is higher, indicating a potentially better return for landlords participating in the Section 8 program. However, it's important to consider that the market rent reflects current rental trends and demand, which suggests a more realistic scenario for most investors. The difference between the two yields highlights the financial advantage of the Section 8 program over typical market conditions.
Given the 9.8% renter density in the area, it's clear that the housing market is primarily driven by homeowners rather than renters. This low density implies that landlords might face challenges in finding tenants willing to pay market rates, making the guaranteed income from the Section 8 program more attractive. Additionally, the lack of data on days on market (DOM) suggests either a stable rental market or limited turnover, further supporting the reliability of the FMR-based yield.
In conclusion, while the FMR-based gross yield of 5.2% is more favorable, the actual market rent yield of 3.8% provides a grounded perspective on what landlords can expect outside of the Section 8 program. For those interested in the stability and guaranteed income provided by the program, the higher yield is a strong incentive. However, for small-portfolio investors looking to maximize returns based on current market conditions, they should consider the lower yield as a baseline for their investment calculations.
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.