Location: Caroline County, MD | Metro: Caroline County, MD
| Unit Size | Monthly FMR |
|---|---|
| Studio | $900 |
| 1 Bedroom | $910 |
| 2 Bedrooms | $1,190 |
| 3 Bedrooms | $1,480 |
| 4 Bedrooms | $1,970 |
| 5 Bedrooms | $2,285 |
| 6 Bedrooms | $2,559 |
| 7 Bedrooms | $2,764 |
| 8 Bedrooms | $2,902 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 21641 provides a clear picture of potential rental yields under government-subsidized versus market conditions. The annualized Fair Market Rent (FMR) for a 2-bedroom apartment in the metropolitan area for fiscal year 2026 is set at $1,170 per month. This translates into an annual income of $14,040 per unit. In contrast, the market rent based on Census ACS data is $955 per month, equating to an annual income of $11,460.
To derive the implied gross yield, we would typically divide the annual income by the median home value. However, the median home value for ZIP 21641 is currently not available, making it impossible to calculate the exact cap rate. Despite this, we can still compare the gross yields based on the monthly rents provided. For the FMR scenario, the gross yield would be higher, reflecting the subsidy's impact on rental income. Conversely, the gross yield under market conditions would be lower, aligning with typical rental rates.
Given the 30.4% renter density in the area, it is important to consider the likelihood of securing tenants who qualify for Section 8. The higher renter density suggests a robust tenant pool, but the lack of specific Days on Market (DOM) data makes it challenging to predict how quickly units might fill under either scenario. Landlords should also factor in the administrative requirements and potential delays associated with Section 8 tenancy when comparing these yields.
In summary, while the median home value is not available to calculate precise cap rates, the comparison between the annualized FMR ($14,040) and market rent ($11,460) indicates that the gross yield under Section 8 would be significantly higher. This is contingent upon the ability to secure qualified tenants and navigate the program's administrative processes. Given the high renter density, the Section 8 option could be more attractive, but investors must weigh this against the uncertainties of filling units and the program's operational complexities.
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.