Location: Warren County, 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 | $1,570 |
| 1 Bedroom | $1,580 |
| 2 Bedrooms | $1,960 |
| 3 Bedrooms | $2,400 |
| 4 Bedrooms | $2,850 |
| 5 Bedrooms | $3,306 |
| 6 Bedrooms | $3,703 |
| 7 Bedrooms | $3,999 |
| 8 Bedrooms | $4,199 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,580 | $218,906 | 0.72% | D |
| 2BR | $1,960 | $298,401 | 0.66% | D |
| 3BR | $2,400 | $342,715 | 0.7% | D |
| 4BR | $2,850 | $457,934 | 0.62% | D |
| 5BR | $3,306 | $447,137 | 0.74% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate picture for ZIP 08865, Phillipsburg, NJ, can be analyzed using the Fair Market Rent (FMR) and Zillow Observed Rent Index (ZORI) figures. For a two-bedroom property, the annualized FMR is $1470 per month, while the market rent based on ZORI is $1,812 per month. Given the median home value of $336,512 in the area, we can calculate the implied gross yield for both scenarios.
Using the FMR figure, the implied gross yield is approximately 5.27%. This is calculated by taking the annualized rent ($1470 * 12 = $17,640) and dividing it by the median home value ($336,512). The formula for this calculation is:
Gross Yield (FMR) = ($17,640 / $336,512) * 100 ≈ 5.27%
On the other hand, if we use the ZORI figure, the implied gross yield increases to about 6.55%. This calculation is done similarly by taking the annualized market rent ($1,812 * 12 = $21,744) and dividing it by the median home value ($336,512). The formula for this calculation is:
Gross Yield (ZORI) = ($21,744 / $336,512) * 100 ≈ 6.55%
The difference between these yields reflects the disparity between government-subsidized rents and market rents. Given the 31.6% renter density in Phillipsburg, NJ, and the average days on market (DOM) of 20 days, the ZORI-based gross yield is more realistic. A lower DOM suggests that rental properties are in high demand, making it likely that landlords can charge closer to market rates. However, investors should consider that Section 8 participation involves additional administrative work and income limitations, which may affect the net operating income (NOI).
In summary, while the FMR-based gross yield stands at 5.27%, the ZORI-based gross yield is higher at 6.55%. Considering the local rental market conditions, the latter provides a more accurate representation of potential returns for landlords and small-portfolio investors in ZIP 08865.
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.