Section 8 Fair Market Rent (FMR) for ZIP 20245 - 2027

FY 2027 Fair Market Rent Rates

The analysis of Section 8 cap rates for ZIP code 20245 is somewhat limited due to incomplete data points, particularly regarding the median home value and market rent. However, we can still provide some insights based on the available Fair Market Rent (FMR) data.

The annualized 2-bedroom FMR for ZIP 20245 in fiscal year 2024 is set at $1980. This figure represents the total monthly payment that a landlord would receive for renting a two-bedroom property under the Section 8 program. To derive the implied gross yield, we need to consider the median home value. Since the median home value is not provided, we cannot calculate an exact gross yield. However, assuming a median home value, the calculation would be straightforward: divide the annualized FMR by the median home value to get the gross yield percentage.

For instance, if the median home value were $400,000, the implied gross yield for a 2-bedroom property would be approximately 5.95% ($1980 * 12 / $400,000 = 0.0595). This scenario assumes that the entire property is rented out as a 2-bedroom unit, which might not be the case in reality. In such a situation, the actual gross yield could be higher or lower depending on the number of bedrooms and the size of the property.

Given the lack of market rent data, it's impossible to compare the Section 8 gross yield directly to the potential gross yield from market rents. Typically, market rents tend to be higher than Section 8 payments, which can lead to a higher gross yield for landlords who choose not to participate in the Section 8 program. The decision to participate should also consider other factors such as renter stability and the administrative aspects of managing Section 8 properties.

The renter density and days on market (DOM) are also critical considerations. Without specific percentages, it's challenging to gauge the likelihood of finding tenants quickly. Generally, higher renter density and shorter DOM periods indicate a more robust rental market, which might favor non-Section 8 investments. Conversely, if the DOM is long and renter density is low, the stability offered by Section 8 could be more appealing.

In conclusion, while the precise gross yield cannot be calculated without the median home value, the annualized FMR of $1980 provides a baseline for estimating potential returns. Landlords and investors must weigh the benefits of guaranteed rent through the Section 8 program against the potential for higher yields in the open market, considering the local rental market dynamics.

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.