Location: Binghamton, NY | Metro: Binghamton, NY MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $860 |
| 1 Bedroom | $970 |
| 2 Bedrooms | $1,240 |
| 3 Bedrooms | $1,560 |
| 4 Bedrooms | $1,800 |
| 5 Bedrooms | $2,088 |
| 6 Bedrooms | $2,339 |
| 7 Bedrooms | $2,526 |
| 8 Bedrooms | $2,652 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 13795, located in Kirkwood, NY, reveals interesting insights into potential investment opportunities. The Fair Market Rent (FMR) for a two-bedroom apartment in this area, for fiscal year 2024, is set at an annualized figure of $1180. This compares to the market rent of $997, as per the Census ACS data.
To derive the gross yield, we must first calculate the annual rental income. For the Section 8 scenario, using the FMR, the annual income would be $1180. Dividing this by the median home value of $178,340 gives us an implied gross yield of approximately 0.66%. In contrast, the market rent scenario yields an annual income of $997, resulting in a gross yield of about 0.56% when divided by the median home value.
The higher gross yield under the Section 8 scenario suggests that it might be more attractive for investors seeking stable, government-backed rental income. However, the reality of the situation is tempered by the fact that only 25.6% of residents in ZIP 13795 are renters. This indicates that the demand for rental properties, including those under the Section 8 program, is relatively low compared to areas with higher renter densities.
The Days on Market (DOM) data being marked as N/A further complicates the analysis. This could mean that either there is insufficient data on how quickly properties are rented out, or the turnover rate is not a significant factor in this particular ZIP code due to its low renter population. Investors should consider these factors carefully before making any decisions.
In conclusion, while the Section 8 scenario offers a slightly better gross yield at 0.66% compared to the market rent yield of 0.56%, the actual feasibility of these yields depends heavily on the local rental market dynamics. Given the lower renter density, the Section 8 option might still be viable, but investors should proceed with caution and conduct thorough local market research to ensure the stability and profitability of their investments.
Data Sources: FMR data from HUD (2027). 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.