Location: Washington-Arlington-Alexandria, DC | Metro: Washington-Arlington-Alexandria, DC-VA-MD HUD Metro FMR Area
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 | $1,870 |
| 1 Bedroom | $1,950 |
| 2 Bedrooms | $2,160 |
| 3 Bedrooms | $2,750 |
| 4 Bedrooms | $3,240 |
| 5 Bedrooms | $3,758 |
| 6 Bedrooms | $4,209 |
| 7 Bedrooms | $4,546 |
| 8 Bedrooms | $4,773 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,950 | $147,617 | 1.32% | A |
| 2BR | $2,160 | $190,681 | 1.13% | B |
| 3BR | $2,750 | $438,197 | 0.63% | D |
| 4BR | $3,240 | $534,294 | 0.61% | D |
| 5BR | $3,758 | $581,752 | 0.65% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 20705, located in Beltsville, MD, provides a detailed look at potential investment returns. Using the Federal Market Rent (FMR) for a two-bedroom apartment set at $1830 per month for fiscal year 2024, the annualized rental income would be $21,960. Given the median home value of $460,394, the implied gross yield for a Section 8 property would be approximately 4.77%. This calculation is based on the formula: (Annualized Rental Income / Median Home Value) * 100.
In contrast, the Zillow Observed Rent Index (ZORI) for the area indicates a market rent of $1,695 per month for a similar unit. When annualized, this translates to an annual rental income of $20,340. Applying the same formula, the gross yield based on market rents would be around 4.42%.
To determine which scenario is more realistic, consider the local renter demographics. With a renter density of 33.0%, it suggests that a significant portion of the population might be eligible for Section 8 housing assistance. Additionally, the days on market (DOM) statistic of 27 days indicates a relatively quick turnover rate, which can be beneficial for maintaining occupancy levels. However, the lower gross yield from market rents reflects the competitive nature of the local rental market and the willingness of tenants to pay less than the FMR.
While the Section 8 scenario offers a higher gross yield, the actual performance of properties may vary based on factors such as maintenance costs, vacancy rates, and the availability of Section 8 vouchers. The market rent scenario, though slightly lower, aligns more closely with current tenant behavior and market conditions. For small-portfolio investors and landlords, understanding these dynamics is crucial for making informed decisions about property investments in Beltsville, MD.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.