Location: Philadelphia-Camden-Wilmington, PA | Metro: Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA
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 | $1,240 |
| 1 Bedroom | $1,340 |
| 2 Bedrooms | $1,600 |
| 3 Bedrooms | $1,910 |
| 4 Bedrooms | $2,100 |
| 5 Bedrooms | $2,436 |
| 6 Bedrooms | $2,728 |
| 7 Bedrooms | $2,946 |
| 8 Bedrooms | $3,093 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,600 | $292,090 | 0.55% | F |
| 3BR | $1,910 | $330,539 | 0.58% | F |
| 4BR | $2,100 | $434,342 | 0.48% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 08312 in Clayton, NJ, reveals some key insights into the potential returns for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a 2-bedroom apartment in this area for FY 2024 is set at $1560 annually, while the market rent based on Census ACS data stands at $1,246 per month.
To calculate the gross yield, we first annualize the market rent: $1,246 multiplied by 12 months equals $14,952 annually. Given the median home value in the area is $335,555, the gross yield for a market-rent scenario is approximately 4.46%. This is derived by dividing the annual rental income ($14,952) by the median home value ($335,555).
In contrast, the annualized FMR for a 2BR unit under Section 8 is $1560. Using the same median home value, the gross yield for a Section 8 scenario drops significantly to about 0.46%. This is calculated by dividing the annual FMR ($1560) by the median home value ($335,555).
The stark difference in gross yields between these two scenarios highlights the financial implications of choosing to participate in the Section 8 program versus renting at market rates. The market rent gross yield of 4.46% is considerably higher and thus more attractive from an investment standpoint compared to the Section 8 gross yield of 0.46%.
Given the renter density of 19.7%, it is clear that the majority of homeowners in Clayton, NJ, are not relying solely on rental income to support their property investments. Additionally, the N/A-day Days on Market (DOM) suggests that there might be limited data available regarding how quickly properties are rented out, but it also implies that the rental market could be stable and consistent, favoring those who can achieve higher rental incomes.
In conclusion, while participating in Section 8 can provide a steady stream of government-backed rental income, the gross yield is substantially lower than what can be achieved through market rents. For landlords and small-portfolio investors looking to maximize returns, the market rent scenario offers a much more favorable gross yield. However, the decision should also consider other factors such as tenant stability and the overall demand for affordable housing in the area.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.