Location: Newark, NJ | Metro: Bergen-Passaic, NJ HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,850 |
| 1 Bedroom | $2,090 |
| 2 Bedrooms | $2,520 |
| 3 Bedrooms | $3,140 |
| 4 Bedrooms | $3,600 |
| 5 Bedrooms | $4,176 |
| 6 Bedrooms | $4,677 |
| 7 Bedrooms | $5,051 |
| 8 Bedrooms | $5,304 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,520 | $660,430 | 0.38% | F |
| 3BR | $3,140 | $782,353 | 0.4% | F |
| 4BR | $3,600 | $901,967 | 0.4% | F |
| 5BR | $4,176 | $1,246,908 | 0.33% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 07009, specifically Cedar Grove, NJ, is centered around the discrepancy between the Fair Market Rent (FMR) set at $2250 for fiscal year 2024 and the actual market rent reported at $1896 according to the Census ACS. This gap stands at $354, representing a 18.7% difference between the two figures. Given that the FMR exceeds the market rent, it indicates a favorable scenario for landlords who can participate in the Housing Choice Voucher program, commonly known as Section 8.
In Cedar Grove, where only 15.7% of residents are renters, the median home value is significantly higher at $758,020, suggesting a predominantly owner-occupied community. The median household income of $151,625 further supports the notion that rental properties are a niche but potentially lucrative segment of the real estate market.
The higher FMR in comparison to the market rent means that voucher tenants can afford to pay more than what the open market demands. For landlords, this translates into an opportunity to achieve better yields on their investments without the typical risks associated with market-rate rentals. The guaranteed payment from the government ensures a steady stream of income, making it a reliable strategy for generating returns in a low-renter population area.
However, it's crucial to note that accepting Section 8 tenants comes with its own set of considerations. Landlords must adhere to HUD regulations and ensure that their properties meet the required standards. Additionally, there might be delays in receiving payments due to administrative processes. Despite these challenges, the financial incentive provided by the voucher program compensates for any potential inconveniences, positioning Cedar Grove as a strong candidate for Section 8 participation.
To summarize, the gap between the FMR and market rent in Cedar Grove, NJ, makes it a prime location for landlords and small-portfolio investors looking to capitalize on the yield benefits offered by the Section 8 program. With a median home value of $758,020 and a median income of $151,625, the community offers a unique blend of high property values and a relatively low-cost rental environment, which can be leveraged to secure consistent, above-market rental income through the voucher program.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.