Location: Waterbury-Shelton, CT | Metro: Waterbury-Shelton, CT MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,680 |
| 1 Bedroom | $1,800 |
| 2 Bedrooms | $2,350 |
| 3 Bedrooms | $2,940 |
| 4 Bedrooms | $3,500 |
| 5 Bedrooms | $4,060 |
| 6 Bedrooms | $4,547 |
| 7 Bedrooms | $4,911 |
| 8 Bedrooms | $5,157 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 06712 in Prospect, CT, reveals a specific picture regarding the Section 8 cap rate. The Fair Market Rent (FMR) for a 2-bedroom apartment in this area for fiscal year 2024 is set at $1650 per month. When annualized, this translates to an annual rental income of $19,800. Against the backdrop of a median home value of $461,927, this yields a gross rental yield of approximately 4.3%. This calculation is derived by dividing the annual rental income by the property value.
In contrast, the market rent for a similar 2-bedroom unit stands at $1,800 per month according to the Census ACS data. Annualizing this figure results in an annual rental income of $21,600. Given the same median home value, this scenario implies a gross rental yield of about 4.7%. This represents a slight improvement over the Section 8 scenario.
The choice between these two scenarios hinges on several factors, including the local demand for rental properties and the specific conditions of the housing market in Prospect, CT. With a renter density of 6.5%, it suggests that a smaller proportion of the population seeks rental accommodation, which could impact the availability of tenants willing to pay market rates. However, the data does not provide days-on-market (DOM) information, which would be crucial in determining how quickly properties can be leased at either rate.
Given the circumstances, the Section 8 scenario with a gross yield of 4.3% is likely more realistic. Landlords often prefer the stability and predictability of Section 8 tenancy over the potential variability in market rents, especially considering the lower renter density which might affect the ability to consistently lease units at higher rates.
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.