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 | $1,750 |
| 1 Bedroom | $1,980 |
| 2 Bedrooms | $2,350 |
| 3 Bedrooms | $2,900 |
| 4 Bedrooms | $3,430 |
| 5 Bedrooms | $3,979 |
| 6 Bedrooms | $4,456 |
| 7 Bedrooms | $4,812 |
| 8 Bedrooms | $5,053 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,350 | $343,675 | 0.68% | D |
| 3BR | $2,900 | $430,964 | 0.67% | D |
| 4BR | $3,430 | $481,441 | 0.71% | D |
U.S. Census Bureau data (2024)
The analysis of ZIP code 07422, located in Highland Lake, NJ, reveals a unique balance between yield and stability that does not fit neatly into either a high-yield/low-stability flip-style market or a steady-cashflow zone. The Federal Market Rent (FMR) for fiscal year 2024 is set at $2170, which is notably lower than the market rent of $2,425. This suggests a moderate potential for rental income, but it's important to consider the home value of $391,199 in this area. Given these figures, the rental yield would be approximately 6.5%, calculated using the FMR, or about 7.2%, using the market rent. These percentages indicate a reasonable yield, but not exceptionally high.
On the stability axis, the situation is somewhat mixed. With only 3.5% of residents being renters, the market is predominantly owner-occupied, which could imply a less volatile rental environment. However, the lack of data on days on market (DOM) and the average household income of $108,722 provide limited insight into the financial health and job security of the local population. While higher incomes generally correlate with greater stability, the low percentage of renters suggests a smaller pool of potential tenants, which could impact vacancy rates and tenant turnover.
Considering the specific figures, Highland Lake, NJ, appears to be a market that offers a middle ground between high yield and stability. It is not a prime candidate for short-term flips due to the relatively modest difference between FMR and market rents, and the low proportion of renters. At the same time, it does not offer the high stability typically associated with steady cash-flow zones, given the limited data on DOM and the potential for a tight rental market.
To summarize, ZIP 07422 presents an opportunity for landlords and small-portfolio investors seeking a moderate yield without the extreme risks associated with highly unstable markets. However, investors should proceed with caution, considering the smaller rental market and the potential challenges of finding and retaining tenants.
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.