Location: Pittsburgh, PA | Metro: Pittsburgh, PA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,110 |
| 1 Bedroom | $1,180 |
| 2 Bedrooms | $1,430 |
| 3 Bedrooms | $1,820 |
| 4 Bedrooms | $1,980 |
| 5 Bedrooms | $2,297 |
| 6 Bedrooms | $2,573 |
| 7 Bedrooms | $2,779 |
| 8 Bedrooms | $2,918 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 15007 provides a clear picture of potential investment returns. The Fair Market Rent (FMR) for a two-bedroom apartment in this area, for fiscal year 2024, is set at $1250 per month. When annualized, this figure translates to an annual rental income of $15,000.
To calculate the implied gross yield based on the FMR, we use the median home value of $293,077. The formula for gross yield is annual rental income divided by property value. Thus, the gross yield using the FMR would be approximately 5.12%. This is derived from $15,000 annual income divided by $293,077 property value.
However, since the market rent is listed as N/A, it's important to consider that actual market rents could potentially exceed the FMR. If market rents were higher, the gross yield would also increase, making the investment more attractive. For instance, if market rents were hypothetically $1400 per month, the gross yield would rise to about 5.86%, a significant improvement over the FMR-based yield.
The renter density of 35.5% indicates that a substantial portion of the population in ZIP 15007 relies on rental housing. This can be seen as a positive indicator for the demand stability of Section 8 properties, as the program supports tenants who might otherwise struggle to afford housing in this area.
Given the lack of specific data on the days-on-market (DOM), it's challenging to predict how quickly a Section 8 property might be leased. However, a high renter density typically suggests lower vacancy rates, which could imply shorter DOM periods. In practice, this means landlords can expect steady occupancy rates, though the exact impact on DOM remains unclear without additional data.
Between the two scenarios, the one based on market rent is more realistic, assuming the market rent indeed surpasses the FMR. The higher gross yield of 5.86% compared to 5.12% reflects a better return on investment. Landlords and small-portfolio investors should aim to secure market rents where possible, while still qualifying for Section 8 subsidies, to maximize their investment returns.
Investors should note that these calculations provide a baseline for understanding the potential of Section 8 investments in ZIP 15007. Actual net operating incomes (NOI) will depend on individual property conditions, management costs, and other factors specific to each investment opportunity.
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.