Location: Orleans County, VT | Metro: Caledonia County, VT
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,170 |
| 1 Bedroom | $1,180 |
| 2 Bedrooms | $1,360 |
| 3 Bedrooms | $1,860 |
| 4 Bedrooms | $2,210 |
| 5 Bedrooms | $2,564 |
| 6 Bedrooms | $2,872 |
| 7 Bedrooms | $3,102 |
| 8 Bedrooms | $3,257 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 05836 reveals some key insights into the potential returns for landlords and small-portfolio investors. To begin, let's consider the annualized Fair Market Rent (FMR) for a 2-bedroom apartment, which is set at $1,150 per month for fiscal year 2026, based on metro rates. This translates to an annual rental income of $13,800.
Given the median home value in ZIP 05836 is $289,955, we can calculate the implied gross yield for a property rented under the Section 8 program. The gross yield is calculated by dividing the annual rental income by the median home value. For the FMR scenario, the gross yield is approximately 4.77%. This figure is derived from the formula: ($13,800 / $289,955) * 100 = 4.77%.
However, it's important to note that the market rent for ZIP 05836 is currently not available. If we were to have a market rent figure, it would provide a direct comparison to the Section 8 FMR. Without this data, it's challenging to determine how much higher or lower the market rent might be compared to the FMR. Nevertheless, we can still evaluate the viability of Section 8 properties in this area based on the available information.
The 5.8% renter density suggests that there is a relatively low demand for rentals in ZIP 05836. This could mean that landlords might face challenges in finding tenants willing to pay the FMR, especially if market rents are significantly higher. Additionally, the lack of data regarding the Days on Market (DOM) makes it difficult to assess how quickly properties might be leased, though a low renter density typically correlates with longer leasing periods.
In conclusion, the implied gross yield of 4.77% for a 2-bedroom property rented under the Section 8 program is a conservative estimate. Given the limited market rent data and the low renter density, this yield should be considered cautiously. Landlords and investors should conduct further research to understand the local rental market dynamics before making investment decisions. The actual performance could vary depending on factors such as the specific location within the ZIP code, the condition of the property, and the overall economic climate.
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.