Location: Philadelphia-Camden-Wilmington, PA | Metro: Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,590 |
| 1 Bedroom | $1,730 |
| 2 Bedrooms | $2,060 |
| 3 Bedrooms | $2,450 |
| 4 Bedrooms | $2,710 |
| 5 Bedrooms | $3,144 |
| 6 Bedrooms | $3,521 |
| 7 Bedrooms | $3,803 |
| 8 Bedrooms | $3,993 |
The analysis for ZIP code 19450 in Pennsylvania reveals key insights into the potential performance of Section 8 properties versus market rent scenarios.
In the case of Section 8, the Fair Market Rent (FMR) for a two-bedroom apartment in fiscal year 2024 is set at $1920 per month. This translates to an annualized income of $23,040. Given that the median home value is not available, we cannot calculate the exact gross yield for a property purchased at the median price. However, assuming a median home value similar to surrounding areas, the gross yield would be significantly lower than what is typically seen in the rental market.
For the market rent scenario, the lack of specific market rent figures and median home values means we must infer based on broader regional trends. If market rents were higher than the Section 8 FMR, the gross yield would naturally be greater, reflecting a stronger return on investment. However, without precise data, it's challenging to quantify this difference accurately.
The implied gross yield for Section 8 properties is calculated by dividing the annualized income ($23,040) by the purchase price of a home. If the median home value were hypothetically $300,000, the gross yield would be approximately 7.68%. In contrast, if market rents were higher, say $2,200 per month, the annualized income would be $26,400, implying a gross yield of about 8.8% at the same median home value.
Given the N/A% renter density and N/A-day Days on Market (DOM), it's reasonable to assume that the market dynamics favor a higher gross yield for market rent properties. The higher renter density suggests a competitive rental market, potentially driving up market rents. A shorter DOM indicates quicker property turnover, which could imply a preference for market rents over Section 8 subsidies.
While the exact figures are not provided, the trend suggests that market rent properties in ZIP 19450 would likely offer a better gross yield compared to those under Section 8. Investors should consider these factors when deciding whether to pursue Section 8 contracts or aim for higher market rents.
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.