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 | $2,190 |
| 1 Bedroom | $2,460 |
| 2 Bedrooms | $2,820 |
| 3 Bedrooms | $3,430 |
| 4 Bedrooms | $4,320 |
| 5 Bedrooms | $5,011 |
| 6 Bedrooms | $5,612 |
| 7 Bedrooms | $6,061 |
| 8 Bedrooms | $6,364 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,820 | $391,046 | 0.72% | D |
| 3BR | $3,430 | $520,670 | 0.66% | D |
| 4BR | $4,320 | $644,566 | 0.67% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 07421, West Milford, NJ, reveals two distinct scenarios based on the Fair Market Rent (FMR) and the market rent. Using the annualized 2BR FMR of $2550 for FY 2024, the gross yield for a property in this area would be approximately 0.54%. This is calculated by taking the annualized FMR ($2550) and dividing it by the median home value ($472,610), which results in a yield of 0.54%.
In contrast, using the market rent figure of $2,166 from the Census ACS, the gross yield drops significantly to about 0.46%. The calculation here involves multiplying the monthly market rent by 12 to get an annual figure ($2,166 * 12 = $25,992) and then dividing that by the median home value ($472,610).
Given the 11.8% renter density in West Milford, the scenario based on the market rent seems more realistic. A lower renter density implies fewer potential tenants, making it harder to secure long-term Section 8 leases at the higher FMR rates. Additionally, the N/A-day Days on Market (DOM) indicates either a very competitive rental market or a lack of recent data, suggesting that landlords might struggle to fill vacancies at the higher FMR rates.
The difference between the 0.54% gross yield from FMR and the 0.46% from market rent is significant for investors. While the FMR provides a benchmark for what the government will pay, the actual market conditions suggest that landlords should expect a yield closer to the market rent figure. This means that when evaluating properties in ZIP 07421 for Section 8 participation, investors should use the lower gross yield as a more conservative estimate for their potential returns.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.