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 | $1,580 |
| 1 Bedroom | $1,720 |
| 2 Bedrooms | $2,050 |
| 3 Bedrooms | $2,440 |
| 4 Bedrooms | $2,690 |
| 5 Bedrooms | $3,120 |
| 6 Bedrooms | $3,494 |
| 7 Bedrooms | $3,774 |
| 8 Bedrooms | $3,963 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,050 | $349,422 | 0.59% | F |
| 3BR | $2,440 | $446,548 | 0.55% | F |
| 4BR | $2,690 | $616,657 | 0.44% | F |
| 5BR | $3,120 | $715,438 | 0.44% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 08505, Bordentown Township, NJ, reveals two distinct rental income scenarios based on the Fair Market Rent (FMR) and market rent figures. The annualized Fair Market Rent for a 2BR unit in FY 2024 is $1850, while the Zillow Observed Rent Index (ZORI) indicates a market rent of $2,349 per month.
To calculate the gross yield for both scenarios, we use the median home value of $457,553 as the basis for our calculations. For the Section 8 scenario, the annual rent would be $1850 multiplied by 12 months, equating to $22,200 annually. This results in a gross yield of approximately 4.85%. In contrast, the market rent scenario yields an annual income of $2,349 multiplied by 12 months, totaling $28,188 annually. This translates to a gross yield of about 6.16%.
The higher gross yield of 6.16% in the market rent scenario compared to the 4.85% in the Section 8 scenario suggests that market rents provide a better return on investment. However, given the 30.9% renter density in ZIP 08505, it's important to consider the demand for rental properties. While this percentage indicates a significant portion of the population is renting, the N/A-day DOM (Days on Market) suggests either very quick turnover or incomplete data, making it difficult to assess the typical vacancy rate or the ease of finding tenants.
In deciding which scenario is more realistic, landlords and small-portfolio investors should weigh the stability and predictability of Section 8 rents against the potential for higher returns from market rents. The lower gross yield from Section 8 can be offset by the security of guaranteed income, whereas the higher gross yield from market rents comes with the risk of vacancy and the need to manage tenant selection carefully.
Ultimately, the decision hinges on the investor's risk tolerance and long-term goals. For those prioritizing steady cash flow and reduced management overhead, the Section 8 scenario with its 4.85% gross yield might be preferable. Conversely, investors willing to accept higher risk for the chance of earning a 6.16% gross yield could opt for the market rent scenario.
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.