Location: Dover, DE | Metro: Dover, DE MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,280 |
| 1 Bedroom | $1,290 |
| 2 Bedrooms | $1,620 |
| 3 Bedrooms | $2,240 |
| 4 Bedrooms | $2,580 |
| 5 Bedrooms | $2,993 |
| 6 Bedrooms | $3,352 |
| 7 Bedrooms | $3,620 |
| 8 Bedrooms | $3,801 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 19980 reveals a complex picture when considering Section 8 properties. The Fair Market Rent (FMR) for a 2-bedroom apartment is set at $1370 annually, according to the FY 2024 figures. However, the market rent for a similar unit is considerably lower at $866 per month, based on Census ACS data.
To derive the cap-rate, we must first calculate the gross yield for both scenarios. In the case of using the FMR, the annual rental income would be $1370 multiplied by 12 months, equating to $16,440. Given that the median home value in the area is not available, we can infer that the investment property value is likely below the typical range for homeownership, making it suitable for rental purposes. Assuming a conservative property value estimate based on comparable rental properties, the gross yield can be calculated by dividing the annual rental income by the property's value.
If we consider the market rent scenario, the annual income would be $866 multiplied by 12, totaling $10,392. This represents a significantly lower gross yield compared to the FMR scenario, indicating that the potential returns are less favorable under current market conditions.
The implied gross-yield from the FMR is higher, suggesting a potentially more attractive investment opportunity for landlords and small-portfolio investors looking to enter into Section 8 housing. However, the reality of the situation is that only 33.9% of the population in ZIP 19980 are renters, which means that there is a limited pool of tenants who might apply for Section 8 housing. Additionally, the lack of Days on Market (DOM) data suggests either an oversupply or undersupply of rental units, which could affect the speed at which a property is leased and the overall occupancy rate.
In conclusion, while the FMR-based gross-yield presents a more appealing figure, the actual performance of a Section 8 property in ZIP 19980 will depend heavily on the local rental market dynamics and tenant demand. Investors should carefully weigh these factors before making any 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.