Location: Buffalo-Cheektowaga, NY | Metro: Buffalo-Cheektowaga, NY MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,210 |
| 1 Bedroom | $1,230 |
| 2 Bedrooms | $1,460 |
| 3 Bedrooms | $1,780 |
| 4 Bedrooms | $2,030 |
| 5 Bedrooms | $2,355 |
| 6 Bedrooms | $2,638 |
| 7 Bedrooms | $2,849 |
| 8 Bedrooms | $2,991 |
The analysis for ZIP code 14272 in New York reveals a limited dataset, making it challenging to provide a comprehensive picture of the Section 8 cap-rate scenario. The Fair Market Rent (FMR) for a two-bedroom apartment in this area for fiscal year 2024 is set at $1190 per month. To annualize this figure, we multiply by 12, resulting in an annual rental income of $14,280. However, the median home value and the actual market rent for the area are not available, which complicates the gross yield calculation.
In the case of using the FMR as a proxy for market rent, the implied gross yield can be derived by comparing the annual rental income to the property value. Given that the median home value is not specified, we cannot calculate a precise gross yield. Typically, for an investment property, the gross yield is calculated as the annual rental income divided by the property's value. For example, if a property were valued at $200,000, the gross yield would be approximately 7.14%. This is based on the FMR alone and does not account for any additional costs such as maintenance, vacancies, or management fees.
Without specific data on market rents, it is impossible to accurately compare the gross yields between the FMR and market rent scenarios. However, it is important to note that the FMR is often lower than the actual market rent, especially in areas where there is high demand for housing. This suggests that the gross yield derived from the FMR might understate the potential income from a market-rate rental scenario.
The lack of detailed data on renter density and days on market (DOM) further hinders a thorough analysis. These metrics are crucial for understanding the local rental market dynamics, including the speed at which properties are rented out and the proportion of renters who might qualify for Section 8 assistance. In the absence of these figures, it is difficult to assess which scenario—using FMR or market rent—is more realistic for calculating the gross yield.
To make an informed decision, investors should seek additional local market data to fill in the gaps. This includes obtaining current market rent values, median home values, and insights into the tenant population, particularly those eligible for Section 8 subsidies. Once these figures are known, a clearer comparison can be made between the gross yields derived from FMR versus market rent, providing a more accurate assessment of the investment potential in ZIP 14272.
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.