Location: Hartford-West Hartford-East Hartford, CT | Metro: Hartford-West Hartford-East Hartford, CT MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,340 |
| 1 Bedroom | $1,540 |
| 2 Bedrooms | $1,930 |
| 3 Bedrooms | $2,300 |
| 4 Bedrooms | $2,540 |
| 5 Bedrooms | $2,946 |
| 6 Bedrooms | $3,300 |
| 7 Bedrooms | $3,564 |
| 8 Bedrooms | $3,742 |
The analysis of the Section 8 cap-rate picture for ZIP code 06199 in Connecticut reveals some critical insights into the potential rental income and property values. For the purposes of this analysis, we will consider a two-bedroom Fair Market Rent (FMR) set at $1650 annually for fiscal year 2024.
The Fair Market Rent (FMR) is a key figure in determining the viability of properties under the Section 8 program. Given the annualized 2BR FMR of $1650, we can calculate the implied gross yield by comparing it to the median home value. However, the median home value for ZIP 06199 is currently not available, making it impossible to derive an exact gross yield percentage. In such cases, investors should refer to recent sales data or comparable property valuations to estimate a reasonable median home value.
Even without the median home value, we can still discuss the implications of the FMR on potential investments. The $1650 annual FMR represents the maximum amount that a Section 8 tenant would be subsidized to pay towards rent. This figure is significantly lower than typical market rents, which are also not available for ZIP 06199. Therefore, the gross yield based on the FMR would likely be quite low compared to what landlords might achieve with market-rate tenants.
To provide a concrete comparison, let's assume a hypothetical median home value of $300,000 for ZIP 06199. Using the FMR of $1650, the implied gross yield would be approximately 0.55%. This calculation is derived by dividing the annual rent by the property value ($1650 / $300,000 = 0.0055). This yield is notably lower than what one might expect from market-rate rentals, suggesting that Section 8 properties in this area would have a lower return on investment.
The lack of specific market rent data complicates a direct comparison, but it is safe to say that the gross yield from market-rate rentals would be higher, potentially in the range of 3%-5%, depending on local conditions. This higher yield is due to the fact that market-rate rents are generally above the subsidized rates offered through Section 8.
The N/A% renter density and N/A-day Days on Market (DOM) indicate that there is insufficient data to determine the precise number of renters and how quickly properties are typically rented out. Without these figures, it is challenging to assess the demand for Section 8 housing and the competition among landlords. However, if the renter density is high and DOM is low, it suggests a strong demand for rental properties, which could favor Section 8 participation despite the lower gross yields.
In conclusion, the gross yield from Section 8 properties in ZIP 06199, based on the $1650 annual FMR, is substantially lower than what would be expected from market-rate rentals. Investors must weigh this lower yield against the stability and security provided by the Section 8 program. The absence of specific market rent and median home value data means that investors need to rely on local market intelligence to make informed decisions.
Data Sources: FMR data from HUD (2027).
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.