Location: Middlesex-Somerset-Hunterdon, NJ | Metro: Warren County, 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 | $2,060 |
| 1 Bedroom | $2,200 |
| 2 Bedrooms | $2,750 |
| 3 Bedrooms | $3,350 |
| 4 Bedrooms | $3,760 |
| 5 Bedrooms | $4,362 |
| 6 Bedrooms | $4,885 |
| 7 Bedrooms | $5,276 |
| 8 Bedrooms | $5,540 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $3,350 | $534,239 | 0.63% | D |
| 4BR | $3,760 | $779,864 | 0.48% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 08802 reveals some interesting insights into potential investment opportunities. With the Fair Market Rent (FMR) for a two-bedroom apartment set at $2510 annually for FY 2024, we can calculate the implied gross yield based on the median home value of $601,227.
First, let's consider the FMR scenario. If an investor acquires a property in this area with a median home value of $601,227 and rents it out at the FMR of $2510 per month, the annual rental income would be $30,120. The gross yield, which is the ratio of annual rental income to the property value, would be approximately 5%. This calculation is straightforward and provides a benchmark for potential returns under the Section 8 program.
However, the market rent for ZIP 08802 is listed as N/A, indicating that there isn't enough data to provide a reliable estimate. Given this lack of information, we cannot accurately calculate a gross yield based on market rent. This absence of data makes it challenging to compare the potential returns from market rent versus the guaranteed Section 8 rent.
To further analyze the situation, we must consider the local rental market conditions. ZIP 08802 has a relatively low renter density of 2.6%, suggesting that the majority of residents prefer homeownership over renting. This could indicate a less competitive rental market, making the Section 8 program a more stable option for landlords. However, without a Day on Market (DOM) figure, we cannot determine how quickly properties are typically rented in this area, which is crucial for understanding the liquidity of rental investments.
In conclusion, while the implied gross yield from the FMR scenario stands at around 5%, the lack of market rent data means we cannot perform a direct comparison. Given the low renter density, the Section 8 program offers a predictable income stream, making it a viable option for investors looking for steady returns. Landlords should weigh this predictability against the potential for higher yields in a more active rental market, if such data were available.
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.