Location: Middlesex-Somerset-Hunterdon, 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 | $2,140 |
| 1 Bedroom | $2,300 |
| 2 Bedrooms | $2,870 |
| 3 Bedrooms | $3,420 |
| 4 Bedrooms | $3,840 |
| 5 Bedrooms | $4,454 |
| 6 Bedrooms | $4,988 |
| 7 Bedrooms | $5,387 |
| 8 Bedrooms | $5,656 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,870 | $567,487 | 0.51% | F |
| 3BR | $3,420 | $741,401 | 0.46% | F |
| 4BR | $3,840 | $953,266 | 0.4% | F |
| 5BR | $4,454 | $1,243,180 | 0.36% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 08820, Edison, NJ, reveals a significant gap between government-subsidized rental income and market rents. For a two-bedroom unit, the Fair Market Rent (FMR) set by the government for fiscal year 2024 is $2490 annually. This translates into an implied gross yield of approximately 0.30% when compared to the median home value of $820,252. The calculation is straightforward: divide the annual FMR by the median home value, resulting in a very low percentage.
In contrast, the Zillow Observed Rent Index (ZORI) indicates that the market rent for a similar two-bedroom unit is $3,111 annually. Using this figure, the implied gross yield increases to about 0.38%. While still quite low, it represents a notable improvement over the Section 8 scenario. The difference highlights the financial realities faced by landlords who choose to participate in the Section 8 program versus those who rely on market rents.
Given the 24.3% renter density in Edison, NJ, it's important to consider how many potential tenants might be eligible for Section 8. However, the lack of data on days-on-market (DOM) suggests that there could be challenges in securing tenants quickly, whether they are through Section 8 or paying market rates. This could impact the overall profitability and cash flow for landlords.
The choice between accepting Section 8 tenants and seeking market-rate renters should be made with a clear understanding of these gross yields. While the Section 8 program provides stability and guaranteed payments, the lower gross yield means that landlords must carefully assess other factors such as maintenance costs, vacancy rates, and the time it takes to secure a tenant. For small-portfolio investors, the decision often hinges on balancing the need for steady income with the desire for higher returns.
To summarize, the gross yield from Section 8 for a two-bedroom unit in ZIP 08820 is approximately 0.30%, while the market rent gross yield is around 0.38%. The latter is more realistic considering the renter density and the absence of DOM data, which implies potential difficulties in tenant acquisition.
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.