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 | $2,260 |
| 1 Bedroom | $2,360 |
| 2 Bedrooms | $2,610 |
| 3 Bedrooms | $3,330 |
| 4 Bedrooms | $3,920 |
| 5 Bedrooms | $4,547 |
| 6 Bedrooms | $5,093 |
| 7 Bedrooms | $5,500 |
| 8 Bedrooms | $5,775 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,610 | $325,377 | 0.8% | C |
| 3BR | $3,330 | $436,854 | 0.76% | D |
| 4BR | $3,920 | $542,472 | 0.72% | D |
| 5BR | $4,547 | $659,659 | 0.69% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 20716 in Bowie, MD, provides valuable insights into potential investment returns. For a two-bedroom property, the Fair Market Rent (FMR) for fiscal year 2024 is set at $2,110 per month, while the market rent, as indicated by the Zillow Observed Rent Index (ZORI), stands at $2,318 monthly.
To calculate the gross yield, we first annualize these figures. The annualized FMR for a two-bedroom unit is $25,320 ($2,110 x 12 months), whereas the annualized market rent amounts to $27,816 ($2,318 x 12 months).
Given the median home value in ZIP 20716 is $463,021, the gross yield based on the FMR would be approximately 5.47%. This is derived by dividing the annualized FMR by the median home value: $25,320 / $463,021 = 0.0547 or 5.47%. In contrast, the gross yield based on the market rent would be slightly higher at 5.99%, calculated by dividing the annualized market rent by the median home value: $27,816 / $463,021 = 0.0599 or 5.99%.
The 30.2% renter density suggests that there is a substantial demand for rental properties in Bowie, MD. However, the N/A-day Days on Market (DOM) indicates incomplete data, which could mean either very quick sales or extended periods without transactions. Despite this uncertainty, the gross yield based on the market rent is more realistic due to the higher figure it uses compared to the FMR. This reflects the actual rents landlords can potentially charge in the current market, rather than the government-set limits.
Investors should consider the FMR scenario as a conservative estimate, suitable for guaranteed income through the Section 8 program. The market rent scenario offers a more optimistic outlook, aligning with current market conditions but subject to the risks associated with fluctuating rental markets.
In summary, the gross yields of 5.47% (FMR) and 5.99% (market rent) provide a range for potential investment returns in ZIP 20716. While the market rent scenario is likely more reflective of true earning potential, the FMR scenario offers stability and predictability for those seeking consistent income streams.
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.