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 | $1,940 |
| 1 Bedroom | $2,030 |
| 2 Bedrooms | $2,240 |
| 3 Bedrooms | $2,850 |
| 4 Bedrooms | $3,360 |
| 5 Bedrooms | $3,898 |
| 6 Bedrooms | $4,366 |
| 7 Bedrooms | $4,715 |
| 8 Bedrooms | $4,951 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,240 | $351,933 | 0.64% | D |
| 3BR | $2,850 | $414,909 | 0.69% | D |
| 4BR | $3,360 | $568,747 | 0.59% | F |
| 5BR | $3,898 | $713,875 | 0.55% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 22553, located in Fredericksburg, VA, provides a clear picture of the financial implications for landlords and small-portfolio investors. To derive the gross yield, we annualize the figures for a two-bedroom unit. The Fair Market Rent (FMR) for a 2BR unit under Section 8 is set at $1850 per month, equating to an annual income of $22,200. In contrast, the market rent, represented by the Zillow Observed Rent Index (ZORI), stands at $1,942 per month, resulting in an annual income of $23,304.
With the median home value in the area at $427,620, we can calculate the implied gross yield for both scenarios. For the Section 8 scenario, the gross yield is calculated as follows: ($22,200 / $427,620) * 100 = approximately 5.19%. On the other hand, the gross yield based on market rent is ($23,304 / $427,620) * 100 = approximately 5.45%.
The gross yield comparison reveals that the market rent offers a slightly higher return on investment compared to the Section 8 rent. However, it's important to consider the context of the local rental market. With a renter density of 19.0%, the demand for rental properties, including those under the Section 8 program, is relatively low. This suggests that landlords might face challenges in filling vacancies, especially if they rely solely on market rents without considering the stability provided by Section 8 tenants.
The Days on Market (DOM) being listed as N/A indicates either a lack of recent data or that the property could be sold quickly, suggesting strong buyer interest. This could imply that the housing market is robust, but it does not directly correlate to rental market dynamics. Given the specific context of ZIP 22553, the Section 8 gross yield of 5.19% is likely more realistic due to the lower renter density and the potential difficulty in maintaining consistent occupancy at market rates.
In summary, while the market rent offers a marginally better gross yield, the stability and guaranteed income from Section 8 tenants, combined with the local rental market conditions, make the 5.19% gross yield a more practical consideration for landlords and investors in ZIP 22553.
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.