Location: Newark, NJ | Metro: Newark, 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 | $1,930 |
| 1 Bedroom | $2,180 |
| 2 Bedrooms | $2,630 |
| 3 Bedrooms | $3,280 |
| 4 Bedrooms | $3,750 |
| 5 Bedrooms | $4,350 |
| 6 Bedrooms | $4,872 |
| 7 Bedrooms | $5,262 |
| 8 Bedrooms | $5,525 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $3,280 | $1,251,082 | 0.26% | F |
| 4BR | $3,750 | $1,528,586 | 0.25% | F |
| 5BR | $4,350 | $1,922,982 | 0.23% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 07041 provides a critical insight into investment potential. To begin, let's annualize the Fair Market Rent (FMR) and Zillow Observed Rent Index (ZORI) for a 2-bedroom apartment. The annualized FMR for a 2BR unit in ZIP 07041 for FY 2024 is $2380, while the annualized market rent based on ZORI is $4,650.
Given the median home value of $1,250,845, we can calculate the implied gross yield for both scenarios. For the FMR scenario, the gross yield is approximately 19%. This is calculated by dividing the annual rent ($2380) by the median home value ($1,250,845). In contrast, using the market rent figure, the gross yield jumps to about 37%, derived from dividing $4,650 by $1,250,845.
The significant difference between these two yields highlights the importance of understanding local rental dynamics. With a renter density of 31.2%, it's evident that a substantial portion of the housing market in ZIP 07041 consists of renters. However, the lack of data regarding days on market (DOM) suggests that there might be challenges in accurately gauging the speed at which properties are rented out.
In evaluating the realism of these yields, the 37% gross yield based on market rent appears more plausible. This is due to the higher renter density, indicating a robust demand for rental properties. While the 19% gross yield from the FMR might be achievable in some cases, it underestimates the actual market conditions where rents are significantly higher. Investors should consider the 37% gross yield as a more accurate representation of potential returns when analyzing the viability of Section 8 investments in ZIP 07041.
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.