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 | $2,460 |
| 1 Bedroom | $2,780 |
| 2 Bedrooms | $3,350 |
| 3 Bedrooms | $4,180 |
| 4 Bedrooms | $4,780 |
| 5 Bedrooms | $5,545 |
| 6 Bedrooms | $6,210 |
| 7 Bedrooms | $6,707 |
| 8 Bedrooms | $7,042 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $3,350 | $567,931 | 0.59% | F |
| 3BR | $4,180 | $762,226 | 0.55% | F |
| 4BR | $4,780 | $918,718 | 0.52% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 07981, Whippany, NJ, reveals a stark contrast between the Federal Market Rent (FMR) and the market rent figures. With an annualized FMR for a 2BR unit at $2870 and the market rent at $2,556, we can calculate the gross yield based on the median home value of $757,037.
First, let's consider the FMR scenario. The annualized rent of $2870 translates to a gross yield of approximately 0.38%. This is calculated by taking the annual rent ($2870) and dividing it by the median home value ($757,037), resulting in a very low yield that would be unattractive to most investors.
Moving on to the market rent scenario, the annualized rent of $2,556 provides a gross yield of around 0.34%. Similar to the FMR calculation, this figure is derived by dividing the annual market rent by the median home value, leading to another low yield that is even less appealing than the FMR scenario.
The gross yield comparisons indicate that neither scenario offers a particularly attractive investment opportunity when considering the median home value in Whippany, NJ. However, given the 12.6% renter density and the lack of data on days on market (DOM), it is more realistic to use the market rent figure of $2,556. This is because the FMR is typically lower than what landlords can charge in the open market, and the actual rental income might align closer to the market rate.
Investors should also take into account the low renter density, suggesting that demand for rentals is relatively low compared to other areas. This factor, combined with the high median home value, implies that the property market in Whippany, NJ, is primarily geared towards homeownership rather than renting. As such, the potential for rental income growth might be limited, making the market rent scenario the more practical basis for investment decisions.
In conclusion, the gross yields of 0.38% for the FMR and 0.34% for the market rent do not present strong returns relative to the median home value. For a more accurate assessment, investors must consider the local rental market dynamics, including the low renter density, which suggests that the $2,556 market rent figure is likely a better indicator for potential rental income.
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.