Location: Atlantic City-Hammonton, NJ | Metro: Atlantic City-Hammonton, NJ HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,380 |
| 1 Bedroom | $1,570 |
| 2 Bedrooms | $1,900 |
| 3 Bedrooms | $2,580 |
| 4 Bedrooms | $2,850 |
| 5 Bedrooms | $3,306 |
| 6 Bedrooms | $3,703 |
| 7 Bedrooms | $3,999 |
| 8 Bedrooms | $4,199 |
The analysis for ZIP code 08213 in New Jersey reveals some limitations due to incomplete data, but we can still draw useful conclusions regarding the potential Section 8 cap rate.
The Fair Market Rent (FMR) for a two-bedroom apartment in ZIP 08213 for fiscal year 2024 is set at an annualized rate of $1670 per month. However, the median home value and current market rent for the area are not available, which complicates a direct comparison. Additionally, the percentage of renter density and the days on market (DOM) are also unspecified, further limiting the precision of our analysis.
In the case where we use the FMR for Section 8 properties, the implied gross yield would be based on the rental income of $1670 per month. This figure represents the government-subsidized rent that tenants pay, which is a fixed amount for qualifying units in this ZIP code.
Without the median home value, it's challenging to calculate an exact cap rate. The cap rate is typically calculated as the net operating income (NOI) divided by the property value. Here, we only have the gross monthly rental income, which suggests a lower gross yield compared to what might be expected from market rents. If market rents were higher, the gross yield would naturally increase, reflecting a more favorable investment scenario for landlords.
Given the lack of specific market rent data, it's difficult to determine which scenario is more realistic. A higher gross yield from market rents would generally be preferable for landlords and small-portfolio investors seeking to maximize returns. However, the stability of Section 8 rents can be attractive, especially if there is a high demand for subsidized housing in the area, which could be inferred from a high renter density or low DOM, though these specifics are not provided.
To make a concrete comparison, investors should consider the risks and benefits associated with each scenario. Section 8 properties offer guaranteed rental income, albeit at a potentially lower gross yield, while market-rate rentals provide the opportunity for higher yields but come with greater risk and uncertainty.
Data Sources: FMR data from HUD (2027).
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.