Location: Rochester, NY | Metro: Rochester, NY MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,030 |
| 1 Bedroom | $1,170 |
| 2 Bedrooms | $1,450 |
| 3 Bedrooms | $1,750 |
| 4 Bedrooms | $1,920 |
| 5 Bedrooms | $2,227 |
| 6 Bedrooms | $2,494 |
| 7 Bedrooms | $2,694 |
| 8 Bedrooms | $2,829 |
The analysis for ZIP code 14649 in Unknown, NY, reveals a challenging landscape for landlords and small-portfolio investors when considering the Section 8 program. The annualized Fair Market Rent (FMR) for a two-bedroom apartment in this area for fiscal year 2024 is set at $1340 per month. However, the median home value and market rent data are currently unavailable, which complicates the calculation of a precise cap rate.
To derive the rough cap-rate picture, we must first understand that the cap rate is the ratio of net operating income (NOI) to property asset value. In this scenario, we can only calculate the implied gross yield based on the FMR, as the median home value is not provided. Assuming a typical home in ZIP 14649 has a value of $200,000, the implied gross yield would be approximately 7.9%. This figure is derived by multiplying the monthly FMR by 12 months ($1340 * 12 = $16,080), then dividing by the assumed median home value ($16,080 / $200,000 = 0.0804 or 8%).
The lack of market rent data means we cannot directly compare this yield to what might be achievable through market-rate rentals. However, if we assume a similar median home value and a higher market rent, say $1500 per month for a two-bedroom unit, the implied gross yield would increase to about 9.0%. This calculation follows the same logic: multiplying the market rent by 12 months ($1500 * 12 = $18,000), then dividing by the assumed median home value ($18,000 / $200,000 = 0.09 or 9%).
Given the incomplete data, it's difficult to determine which scenario is more realistic. However, the renter density and days on market (DOM) information are also not available, making it impossible to assess the demand for rental properties in ZIP 14649. Without these metrics, investors should proceed with caution and conduct thorough due diligence before committing to either market-rate or Section 8 investments.
In conclusion, while the Section 8 program offers a guaranteed income stream at an implied gross yield of 8%, market-rate rentals could potentially offer a higher yield of around 9%. The decision ultimately depends on the investor's risk tolerance and the actual conditions of the rental market in ZIP 14649, which require further investigation beyond the provided data.
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.