Section 8 Fair Market Rent (FMR) for ZIP 11242 - 2027

FY 2027 Fair Market Rent Rates

The analysis for ZIP code 11242 reveals some key insights into the potential Section 8 cap rates, despite limited market data. For the fiscal year 2024, the Fair Market Rent (FMR) for a two-bedroom apartment in this ZIP code is set at $2730 annually. Given that the median home value is not available, we must rely on the annualized FMR to derive an implied gross yield. Assuming a property value based on typical rental yields, let's consider a hypothetical property value of $300,000, which is a reasonable estimate for the area.

Using the $2730 annualized FMR, the implied gross yield for a Section 8 property would be approximately 0.91%, calculated by dividing the annual rent by the property value ($2730 / $300,000 = 0.0091). This yield is quite low compared to traditional rental investments, which often aim for higher returns. However, it's important to note that this calculation does not account for other factors such as maintenance costs, vacancy rates, or management fees, which can significantly impact net operating income (NOI).

In contrast, the market rent for the area is not available, suggesting either a lack of recent transactions or a highly competitive rental market. Without specific market rent figures, we cannot calculate an exact gross yield. However, if we assume that market rents might be higher due to demand, the gross yield would likely exceed the 0.91% derived from the Section 8 scenario. This implies that traditional market rentals could offer a more attractive return on investment, assuming comparable property values.

The lack of specific median home value and market rent data makes it challenging to provide a definitive comparison. However, the low gross yield from the Section 8 program suggests that it might be less appealing for landlords and small-portfolio investors seeking higher returns. The N/A% renter density and N/A-day days on market (DOM) indicate a need for further research to understand the local rental dynamics fully. Despite these limitations, the Section 8 scenario provides a baseline for understanding the minimum expected return from renting to Section 8 tenants in ZIP 11242.

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.