Location: Trenton-Princeton, NJ | Metro: Middlesex-Somerset-Hunterdon, 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 | $1,720 |
| 1 Bedroom | $1,930 |
| 2 Bedrooms | $2,450 |
| 3 Bedrooms | $2,980 |
| 4 Bedrooms | $3,350 |
| 5 Bedrooms | $3,886 |
| 6 Bedrooms | $4,352 |
| 7 Bedrooms | $4,700 |
| 8 Bedrooms | $4,935 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $2,980 | $641,612 | 0.46% | F |
| 4BR | $3,350 | $850,314 | 0.39% | F |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 08525 reveals interesting insights for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a two-bedroom property in this area, as set by HUD for FY 2024, is $2430 per month. Meanwhile, the Census American Community Survey (ACS) indicates that the market rent for a similar unit is $1,835 per month.
To calculate the gross yield, we first annualize these monthly rents. For the Section 8 scenario, the annualized rent is $2430 multiplied by 12 months, equating to $29,160 annually. Dividing this amount by the median home value of $655,541 yields an implied gross yield of approximately 4.45%. In contrast, the market rent annualizes to $1,835 times 12, totaling $22,020 annually. This results in an implied gross yield of about 3.36% when compared to the median home value.
Given the 11.9% renter density in ZIP 08525, it's important to note that the number of days on the market (DOM) is listed as N/A, suggesting either insufficient data or a highly competitive rental market where properties are rented quickly. However, the higher implied gross yield from the Section 8 scenario, at 4.45%, is more attractive than the market rent yield of 3.36%. This makes the Section 8 option a more compelling choice for investors looking to secure a steady income stream with less risk of vacancy.
The higher yield in the Section 8 scenario is directly tied to the guaranteed nature of the rent payments, backed by the federal government. While the market rent scenario offers a lower gross yield, it might be seen as slightly more flexible due to potential increases in rent over time if the market conditions improve. However, considering the stable occupancy rates typically associated with Section 8 tenancy, the 4.45% gross yield is likely more realistic for most investors in this 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.