Location: Bedford County, PA | Metro: Altoona, PA MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $830 |
| 1 Bedroom | $860 |
| 2 Bedrooms | $1,030 |
| 3 Bedrooms | $1,410 |
| 4 Bedrooms | $1,540 |
| 5 Bedrooms | $1,786 |
| 6 Bedrooms | $2,000 |
| 7 Bedrooms | $2,160 |
| 8 Bedrooms | $2,268 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate picture for ZIP code 15946 reveals a distinct contrast between government-subsidized rental income and market-driven rental income. For the fiscal year 2024, the Fair Market Rent (FMR) for a 2-bedroom apartment in ZIP 15946 is set at $850 per month. This translates into an annualized rental income of $10,200. Given the median home value in this area stands at $104,421, the implied gross yield for a Section 8 tenant would be approximately 9.77%. This calculation is based on the assumption that the property's value is indicative of the investment size.
In comparison, the market rent for a similar 2-bedroom unit, according to the Census American Community Survey (ACS), is $662 per month. When annualized, this amounts to $7,944 per year. Using the same median home value, the gross yield for a market tenant would be about 7.61%. These figures clearly show that the gross yield from a Section 8 tenant is higher by about 2.16 percentage points compared to a market tenant.
The higher gross yield from Section 8 tenants can be attributed to the stability and predictability of the rental income, which is guaranteed by the federal government. However, the reality of the situation must also take into account the 16.9% renter density in ZIP 15946. This suggests that only a fraction of potential tenants might be interested in renting through the Section 8 program, thereby limiting the pool of eligible renters.
Furthermore, the N/A-day Days on Market (DOM) indicates that there isn't sufficient data to determine how quickly properties are rented out in this area. This lack of information makes it difficult to assess the turnover rate and the time it might take to secure a Section 8 tenant versus a market tenant. In practice, landlords should consider these factors when deciding whether to participate in the Section 8 program.
Given the data, the gross yield from a Section 8 tenant is more favorable at 9.77%, compared to the market yield of 7.61%. However, the decision to participate in the Section 8 program should also factor in the local rental market dynamics and the specific requirements and regulations associated with the program.
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.