Location: Caledonia County, VT | Metro: Caledonia County, VT
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,370 |
| 1 Bedroom | $1,380 |
| 2 Bedrooms | $1,580 |
| 3 Bedrooms | $2,190 |
| 4 Bedrooms | $2,640 |
| 5 Bedrooms | $3,062 |
| 6 Bedrooms | $3,429 |
| 7 Bedrooms | $3,703 |
| 8 Bedrooms | $3,888 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 05821 provides insight into the financial viability of properties in this area for landlords and small-portfolio investors. To begin, let's consider the Federal Market Rent (FMR) for a 2-bedroom apartment, which is set at $1,310 annually for Fiscal Year 2026, based on metro rates. This translates to a monthly rental income of approximately $109.17 under the Section 8 program.
Next, we'll compare this to the market rent, which stands at $1,050 annually according to the Census ACS data. This equates to a monthly market rent of about $87.50. The median home value in ZIP 05821 is $326,586, providing a baseline for property values.
The implied gross-yield for a property rented through the Section 8 program can be calculated as follows: taking the annualized FMR of $1,310 and dividing it by the median home value of $326,586 yields an approximate gross-yield of 0.40%. In contrast, using the market rent figure of $1,050 and performing the same calculation gives us an implied gross-yield of 0.32%.
Given the 18.5% renter density in ZIP 05821, it is important to note that while the higher gross-yield under Section 8 might seem attractive, the reality of the situation is more nuanced. The renter density indicates that only a portion of potential tenants would be interested in Section 8 housing, and the lack of data on days on market (DOM) suggests challenges in accurately predicting vacancy rates and tenant turnover.
In conclusion, while the Section 8 scenario offers a slightly higher gross-yield at 0.40%, compared to the market rent yield of 0.32%, the practical considerations of renter demand and tenant management must also be factored into investment decisions. For landlords and small-portfolio investors, understanding these dynamics is crucial when deciding whether to participate in the Section 8 program or aim for market rents.
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.