Location: Staunton-Stuarts Draft, VA | Metro: Charlottesville, VA MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,280 |
| 1 Bedroom | $1,450 |
| 2 Bedrooms | $1,650 |
| 3 Bedrooms | $2,000 |
| 4 Bedrooms | $2,460 |
| 5 Bedrooms | $2,854 |
| 6 Bedrooms | $3,196 |
| 7 Bedrooms | $3,452 |
| 8 Bedrooms | $3,625 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 22920 in Afton, Virginia, provides valuable insights into the potential returns for landlords and small-portfolio investors. To begin, we annualize the Fair Market Rent (FMR) for a two-bedroom property at $1480 per month, resulting in an annual rent of $17,760. When this figure is compared to the median home value of $450,931, the implied gross yield is approximately 3.9%. This calculation is based on the formula for gross yield: (Annual Rent / Median Home Value).
Next, we consider the market rent, which stands at $971 per month according to the Census ACS data. Annualizing this amount gives us an annual rent of $11,652. Using the same median home value, the implied gross yield in this scenario drops to about 2.6%. The difference between these two yields highlights the financial impact of participating in the Section 8 program versus renting at market rates.
Given that only 18.2% of residents in ZIP 22920 are renters, the market rent scenario might be more reflective of the actual rental environment. However, the Section 8 rent scenario offers a higher gross yield, making it potentially more attractive to investors seeking steady income. It's important to note that the Days on Market (DOM) is listed as N/A, which could indicate a lack of recent data or activity in the rental market, adding uncertainty to the analysis.
In conclusion, while the Section 8 program provides a higher gross yield of 3.9%, the lower renter density suggests that securing tenants at market rates may be challenging. Investors should weigh the benefits of the guaranteed income from Section 8 against the potential difficulties in finding market-rate tenants. The choice between the two options will depend on individual investment strategies and risk tolerance.
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.