Location: Washington-Arlington-Alexandria, DC | Metro: Washington-Arlington-Alexandria, DC-VA-MD HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $2,880 |
| 1 Bedroom | $3,010 |
| 2 Bedrooms | $3,330 |
| 3 Bedrooms | $4,240 |
| 4 Bedrooms | $4,990 |
| 5 Bedrooms | $5,788 |
| 6 Bedrooms | $6,483 |
| 7 Bedrooms | $7,002 |
| 8 Bedrooms | $7,352 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 20812 reveals a challenging investment scenario for landlords and small-portfolio investors. The Federal Market Rent (FMR) for a two-bedroom apartment in fiscal year 2024 is set at $2860 annually. This figure is crucial for understanding the potential income from Section 8 tenants.
To derive the gross yield, we must compare the annualized FMR against the median home value in the area. Given that the median home value in ZIP 20812 is $1,332,548, the gross yield based on the FMR would be approximately 0.21%. This calculation is straightforward: divide the annual rental income by the property's value ($2860 / $1,332,548 = 0.21%).
However, the market rent for ZIP 20812 is listed as N/A, indicating a lack of comprehensive data regarding the local rental market. Assuming the market rent were available and significantly higher than the FMR, it could offer a more attractive gross yield. For example, if the market rent were $3000 per month, the annual market rent would be $36,000, leading to a gross yield of 2.7%. This is a stark contrast to the 0.21% derived from the FMR.
The low renter density of 1.0% suggests that the number of potential Section 8 tenants is limited. This makes the scenario based on the FMR less appealing for landlords looking to maximize returns. Additionally, the N/A-day Days on Market (DOM) indicates incomplete data, further complicating the analysis. A higher DOM typically implies lower demand and longer vacancy periods, which can negatively impact a property's profitability.
In conclusion, while the theoretical gross yield based on the FMR is 0.21%, a more realistic assessment would consider the limitations posed by the low renter density and the lack of precise market rent data. Investors should focus on the broader context of the local rental market before making decisions based solely on the Section 8 FMR.
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.