Location: New Haven, CT | Metro: New Haven, CT MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,620 |
| 1 Bedroom | $1,750 |
| 2 Bedrooms | $2,100 |
| 3 Bedrooms | $2,610 |
| 4 Bedrooms | $2,950 |
| 5 Bedrooms | $3,422 |
| 6 Bedrooms | $3,833 |
| 7 Bedrooms | $4,140 |
| 8 Bedrooms | $4,347 |
The analysis for ZIP code 06503 in Connecticut reveals some key points regarding the potential Section 8 cap rate. The Fair Market Rent (FMR) for a two-bedroom apartment, as set by HUD for fiscal year 2024, is $1620 annually. However, without a specific figure for the market rent, it's challenging to provide an exact comparison.
To calculate the implied gross yield for a Section 8 property, we would typically divide the annual rental income by the purchase price of the property. In this case, using the FMR of $1620, the implied gross yield can be derived once the median home value is known. Unfortunately, the median home value for ZIP 06503 is not available, which means we cannot calculate the precise gross yield.
Without the market rent data, it's impossible to determine the gross yield for non-Section 8 properties, thereby making it difficult to compare the yields directly. However, it's worth noting that Section 8 properties often have a lower gross yield compared to market-rate rentals due to the fixed nature of the rental payments. This makes the Section 8 option less attractive if the market rent significantly exceeds the FMR.
The lack of specific renter density percentage and days on market (DOM) further complicates the analysis. Typically, higher renter density and shorter DOM indicate a stronger demand for rental properties, which could support higher market rents. Conversely, lower renter density and longer DOM might suggest a weaker rental market, potentially aligning more closely with the Section 8 FMR.
In conclusion, while the Section 8 FMR provides a baseline for rental income, the absence of market rent and property value data prevents a comprehensive cap rate analysis. Investors should gather additional local market data to make informed decisions about the potential returns in ZIP 06503.
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.