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 | $2,600 |
| 1 Bedroom | $2,710 |
| 2 Bedrooms | $3,000 |
| 3 Bedrooms | $3,820 |
| 4 Bedrooms | $4,500 |
| 5 Bedrooms | $5,220 |
| 6 Bedrooms | $5,846 |
| 7 Bedrooms | $6,314 |
| 8 Bedrooms | $6,630 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $3,000 | $322,718 | 0.93% | C |
| 3BR | $3,820 | $495,157 | 0.77% | D |
| 4BR | $4,500 | $760,462 | 0.59% | F |
| 5BR | $5,220 | $887,329 | 0.59% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 20832 in Olney, MD, provides a clear picture of the financial viability of participating in the program. The Fair Market Rent (FMR) for a two-bedroom apartment in fiscal year 2024 is set at $2420 annually. In contrast, the market rent, represented by the Zillow Observed Rent Index (ZORI), stands at $2,661 per month, or $31,932 annually.
To calculate the implied gross yield for a property valued at $668,871, we first annualize the FMR and compare it to the market rent. For the Section 8 scenario, the annualized rental income is $2420 multiplied by 12 months, yielding an annual income of $29,040. This results in a gross yield of approximately 4.34%, calculated by dividing the annual income ($29,040) by the median home value ($668,871).
On the other hand, if the property were rented at market rates, the annual income would be $31,932, leading to a gross yield of about 4.78%. This calculation is derived by dividing the annual market rent ($31,932) by the median home value ($668,871).
Given the 13.1% renter density in Olney, MD, it's important to note that while the gross yield from market rents is higher, the reality of finding and retaining tenants under the Section 8 program must also be considered. The N/A-day Days on Market (DOM) indicates that there might be challenges in accurately predicting how long it takes to lease a property under the Section 8 program, due to factors such as government processing times and tenant turnover rates.
In conclusion, the gross yield from renting a property under the Section 8 program at $29,040 annually is 4.34%, compared to a gross yield of 4.78% from renting at market rates. While the market rent scenario offers a slightly better return, the stability and security provided by the Section 8 program may outweigh the difference in yield for some investors, especially considering the unique characteristics of the local rental market.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.