Location: Lebanon, PA | Metro: Lebanon, PA MSA
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $950 |
| 1 Bedroom | $1,020 |
| 2 Bedrooms | $1,290 |
| 3 Bedrooms | $1,660 |
| 4 Bedrooms | $1,810 |
| 5 Bedrooms | $2,100 |
| 6 Bedrooms | $2,352 |
| 7 Bedrooms | $2,540 |
| 8 Bedrooms | $2,667 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,290 | $228,017 | 0.57% | F |
| 3BR | $1,660 | $270,934 | 0.61% | D |
| 4BR | $1,810 | $329,488 | 0.55% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 17046 (Lebanon, PA) reveals two distinct gross-yield scenarios based on the Federal Market Rent (FMR) and the Zillow Observed Rent Index (ZORI).
First, using the annualized 2BR FMR of $1180 for FY 2024, the total annual rental income would be $14,160. Given the median home value of $258,512, the implied gross-yield for the Section 8 scenario is calculated as follows:
$14,160 / $258,512 = 5.48%.
Second, using the ZORI market rent of $1,204, the total annual rental income would be $14,448. The implied gross-yield for the market rent scenario is:
$14,448 / $258,512 = 5.59%.
The difference between these two yields is marginal, with the market rent scenario offering a slightly higher gross-yield. However, the reality of the situation is more nuanced. With a renter density of 36.4%, it's clear that a significant portion of the population in Lebanon, PA, relies on rental housing. This statistic underscores the potential demand for Section 8 properties.
The N/A-day DOM (days on market) suggests that there might be limited data available regarding how quickly rental units are being leased. Despite this, the slight edge in gross-yield offered by market rent does not necessarily outweigh the stability and guaranteed income provided by Section 8 contracts.
In conclusion, while the market rent scenario provides a marginally better gross-yield at 5.59% compared to the Section 8 scenario at 5.48%, the predictability and security of Section 8 contracts can be more attractive to landlords and small-portfolio investors looking for steady cash flow. The choice ultimately depends on the investor's risk tolerance and investment goals.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.