Location: Baltimore-Columbia-Towson, MD | Metro: Baltimore-Columbia-Towson, MD MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,480 |
| 1 Bedroom | $1,580 |
| 2 Bedrooms | $1,950 |
| 3 Bedrooms | $2,440 |
| 4 Bedrooms | $2,710 |
| 5 Bedrooms | $3,144 |
| 6 Bedrooms | $3,521 |
| 7 Bedrooms | $3,803 |
| 8 Bedrooms | $3,993 |
The analysis of the Section 8 cap rate scenario for ZIP code 21139 in Maryland reveals some key insights into the potential rental yields for landlords and small-portfolio investors.
In FY 2024, the Fair Market Rent (FMR) for a two-bedroom apartment in ZIP 21139 is set at $1890 per month. Annualizing this figure, we get an annual rent of $22,680. This represents the maximum allowable rent that can be charged to tenants participating in the Section 8 program. Given the median home value is not available, we must rely on the FMR to estimate the gross yield. Assuming a typical price-to-rent ratio of around 150 times the annual rent for a comparable property, the implied property value would be approximately $3,402,000. Thus, the gross yield based on the FMR would be about 0.67% ($22,680 / $3,402,000).
The market rent for the area is also not specified, making it challenging to compare the gross yield against non-subsidized rental income. However, if the market rent were higher than the FMR, the gross yield would be greater, indicating potentially better returns for landlords willing to accept market rates.
The lack of data on renter density and days on market (DOM) complicates the assessment of which scenario is more realistic. Typically, a higher renter density suggests a robust demand for rentals, which could support market rents. Conversely, a longer DOM might indicate that market rents are less competitive compared to subsidized options.
To summarize, while the Section 8 program offers a stable and predictable income source with a gross yield of 0.67%, the absence of market rent data makes it impossible to definitively state whether market rents would provide a more attractive investment opportunity. Landlords should consider local rental market dynamics, including competition and tenant preferences, when deciding between accepting Section 8 tenants or pursuing market-rate renters.
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.