Location: Pittsburgh, PA | Metro: Pittsburgh, PA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $880 |
| 1 Bedroom | $940 |
| 2 Bedrooms | $1,140 |
| 3 Bedrooms | $1,450 |
| 4 Bedrooms | $1,580 |
| 5 Bedrooms | $1,833 |
| 6 Bedrooms | $2,053 |
| 7 Bedrooms | $2,217 |
| 8 Bedrooms | $2,328 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate for ZIP code 16029 reveals a nuanced picture for potential investors. To start, let's consider the annualized Fair Market Rent (FMR) for a 2-bedroom apartment, which is set at $1040 per month for FY 2024. This translates to an annual rental income of $12,480 if the property is rented under the Section 8 program. Given the median home value in this ZIP code is $165,381, the implied gross yield for a Section 8 property would be approximately 7.55%. This is calculated by dividing the annual rental income by the median home value.
On the other hand, the market rent for a similar 2-bedroom apartment is listed at $923 per month according to the Census ACS data. This equates to an annual rental income of $11,076. When we apply this figure to the median home value, the implied gross yield drops to about 6.70%. This calculation provides a baseline for comparing the potential returns between Section 8 properties and market-rate rentals.
The gross yield difference highlights that Section 8 properties offer a slightly higher return compared to market-rate rentals. However, the decision to invest in either type hinges on several factors, including the local demand for affordable housing and the ease of finding qualified tenants. With a renter density of 15.3%, it suggests that the majority of residents in ZIP 16029 own their homes, potentially making it more challenging to find renters, especially those who qualify for the Section 8 program. The N/A-day DOM (Days on Market) indicates that there might be insufficient data regarding how quickly properties are rented out, which could affect the liquidity and turnover rates of these investments.
In conclusion, while the Section 8 program offers a marginally better gross yield at 7.55% compared to the market rate's 6.70%, the lower renter density and uncertain DOM data imply that market-rate rentals might be more practical for landlords and small-portfolio investors. These figures should serve as a starting point for further analysis and due diligence before making any investment decisions.
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.