Location: Middlesex-Somerset-Hunterdon, NJ | Metro: Middlesex-Somerset-Hunterdon, NJ HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,930 |
| 1 Bedroom | $2,080 |
| 2 Bedrooms | $2,590 |
| 3 Bedrooms | $3,090 |
| 4 Bedrooms | $3,460 |
| 5 Bedrooms | $4,014 |
| 6 Bedrooms | $4,496 |
| 7 Bedrooms | $4,856 |
| 8 Bedrooms | $5,099 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 07064 reveals a significant disparity between the federally mandated Fair Market Rent (FMR) and the actual market conditions. For a two-bedroom apartment, the annualized FMR is set at $2150 for the fiscal year 2024. Given the median home value in this area is $544,609, we can calculate an implied gross yield based on these figures.
In the context of Section 8 participation, the implied gross yield is calculated as follows: The monthly rent of $2150 translates to an annual rental income of $25,800. This amount, when compared to the median home value of $544,609, suggests a gross yield of approximately 4.74%. This calculation is straightforward and does not account for any vacancy rates or operating expenses, which would typically be factored into a Net Operating Income (NOI) analysis.
However, the lack of data on market rents and days on market (DOM) complicates a direct comparison. Assuming that the market rent could potentially be higher, the absence of specific figures means we cannot provide a precise gross yield for the market scenario. Nonetheless, it's reasonable to infer that market rents would likely exceed the FMR, leading to a higher gross yield under normal market conditions.
The 2.7% renter density indicates a relatively low proportion of renters in ZIP 07064, which might suggest that the demand for rental properties, including those participating in Section 8, could be lower than in areas with higher renter populations. This factor, combined with the unknown DOM, makes it difficult to definitively state how realistic the Section 8 gross yield is compared to potential market yields.
Given the limited market data, the Section 8 gross yield of 4.74%, while not exceptionally high, provides a stable and predictable income source for landlords and small-portfolio investors. It is important to note that this yield is derived purely from the FMR and median home value, without considering other market dynamics such as property management costs or the local housing market's overall health. For a more comprehensive analysis, investors should consider these additional factors.
To summarize, the Section 8 gross yield for ZIP 07064 is 4.74% based on the annualized FMR for a two-bedroom unit. While market rents could offer a higher gross yield, the exact figure remains unclear due to insufficient data. Investors must weigh the stability offered by Section 8 against the potential risks and rewards of the broader rental market.
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.