Section 8 Fair Market Rent (FMR) for ZIP 10120 - 2027

FY 2027 Fair Market Rent Rates

The analysis for ZIP code 10120 in New York reveals some limitations due to incomplete data, particularly concerning the median home value and specific market rent figures. However, we can still derive a rough cap-rate picture using the available Fair Market Rent (FMR) for a two-bedroom apartment, which is set at $3450 annually for fiscal year 2024.

To calculate the implied gross yield, we first need to annualize the FMR. Given that the FMR for a two-bedroom apartment is $3450 per month, the annual figure is $41,400. This represents the maximum allowable rent for Section 8 tenants in this area.

In the absence of specific market rent data, we cannot directly compare the gross yields. However, if we assume the market rent to be higher than the FMR, the gross yield would naturally be lower for Section 8 properties compared to market-rate rentals. For example, if market rents were $4500 per month, the annual market rent would be $54,000, implying a higher gross yield than the $41,400 annualized FMR.

The implied gross yield for a Section 8 property in ZIP 10120 is thus based on the $41,400 annual rent. Without the median home value, it's impossible to calculate an exact cap rate, but we can infer that the yield will be lower than that of a market-rate rental property due to the capped rent levels.

Given the lack of precise data on renter density and days on market (DOM), it's challenging to determine which scenario is more realistic. Typically, higher renter density and shorter DOM indicate a stronger rental market, which could suggest that market-rate rentals might offer a better gross yield. However, the stability and predictability of Section 8 rents can also be appealing to certain investors, especially those looking for long-term, government-backed income streams.

Despite these uncertainties, the key takeaway is that the gross yield from a Section 8 property in ZIP 10120 is likely to be less than that from a market-rate rental, primarily because of the rent ceiling imposed by the program. Investors should consider this when evaluating potential returns.

Data Sources: FMR data from HUD (2027).

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.