Location: Worcester County, MD | Metro: Worcester County, MD
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 | $1,040 |
| 1 Bedroom | $1,040 |
| 2 Bedrooms | $1,240 |
| 3 Bedrooms | $1,720 |
| 4 Bedrooms | $2,070 |
| 5 Bedrooms | $2,401 |
| 6 Bedrooms | $2,689 |
| 7 Bedrooms | $2,904 |
| 8 Bedrooms | $3,049 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,040 | $276,360 | 0.38% | F |
| 2BR | $1,240 | $415,673 | 0.3% | F |
| 3BR | $1,720 | $576,581 | 0.3% | F |
| 4BR | $2,070 | $796,183 | 0.26% | F |
| 5BR | $2,401 | $1,053,407 | 0.23% | F |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate picture for ZIP code 21842 in Maryland reveals some key insights into potential investment opportunities. To begin with, the Fair Market Rent (FMR) for a two-bedroom property in fiscal year 2024 is set at $1160 per month. This translates to an annualized rental income of $13,920. In contrast, the Zillow Observed Rent Index (ZORI) indicates that the market rent for a similar property is $2,053 per month, equating to an annual rental income of $24,636.
Based on the median home value of $440,835 in this ZIP code, we can calculate the implied gross yield for both scenarios. For the Section 8 scenario, the gross yield is approximately 3.16%, calculated as $13,920 divided by $440,835. On the other hand, the market rent scenario yields a gross return of about 5.59%. This is determined by dividing the annual market rent of $24,636 by the median home value.
Given the 24.0% renter density and a days on market (DOM) figure of 51 days, it's important to consider which scenario is more realistic. The lower renter density suggests a smaller pool of potential tenants, while the shorter DOM indicates that homes are typically rented out relatively quickly once listed. However, the higher demand for affordable housing often associated with Section 8 programs can offset the lower renter density.
In practice, the Section 8 scenario, despite offering a lower gross yield, may be more stable and secure for investors due to the guaranteed rental income and lower risk of vacancy. The market rent scenario provides a significantly higher gross yield, but it comes with greater volatility and uncertainty regarding tenant turnover and rental collection rates.
Therefore, for landlords and small-portfolio investors looking to balance between yield and stability, the choice between these two scenarios should be carefully considered based on individual risk tolerance and investment goals. While the market rent scenario offers a more lucrative return, the Section 8 program provides a steady income stream with fewer financial risks.
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.