Location: Richmond, VA | Metro: Richmond, VA 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 | $1,780 |
| 1 Bedroom | $1,860 |
| 2 Bedrooms | $2,020 |
| 3 Bedrooms | $2,490 |
| 4 Bedrooms | $3,060 |
| 5 Bedrooms | $3,550 |
| 6 Bedrooms | $3,976 |
| 7 Bedrooms | $4,294 |
| 8 Bedrooms | $4,509 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,020 | $346,260 | 0.58% | F |
| 3BR | $2,490 | $357,710 | 0.7% | D |
| 4BR | $3,060 | $427,506 | 0.72% | D |
| 5BR | $3,550 | $559,297 | 0.63% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 23236 in Richmond, VA, provides valuable insights into investment opportunities for landlords and small-portfolio investors. To begin, let's consider the annualized Fair Market Rent (FMR) for a two-bedroom unit, which stands at $1780 for fiscal year 2024. This translates to an annual rental income of $21,360. The median home value in this area is $391,012.
Using these figures, we can calculate the implied gross yield for a Section 8 property. The formula for gross yield is annual rental income divided by the property value. In this case, the calculation would be $21,360 / $391,012, resulting in a gross yield of approximately 5.46%. This represents the potential return on investment based solely on rental income without considering operating expenses.
Next, let's look at the market rent, which is represented by the Zillow Observed Rental Index (ZORI) at $1,742 per month. Annualizing this figure gives us an annual rental income of $20,904. Using the same median home value, the gross yield for a market-rent property would be $20,904 / $391,012, equating to about 5.35%.
The difference between the Section 8 gross yield and the market gross yield is minimal, with the Section 8 scenario offering a slightly higher return at 5.46% compared to the market rate at 5.35%. However, the decision on which scenario is more realistic should take into account the local rental market conditions. In ZIP 23236, the renter density is 15.8%, indicating that a significant portion of the population rents rather than owns homes. Additionally, the days on market (DOM) for rentals is 6 days, suggesting a robust demand for rental properties.
Given these factors, it is reasonable to conclude that while the Section 8 gross yield is marginally higher, the short DOM and high renter density suggest that market-rate rentals might be more readily occupied, leading to a more stable and predictable cash flow. Investors should weigh the benefits of a slightly higher gross yield from Section 8 against the potential challenges of tenant turnover and management associated with government-subsidized housing programs.
In summary, the gross yield for a Section 8 property in ZIP 23236 is approximately 5.46%, while for a market-rate rental, it is around 5.35%. The slight advantage of Section 8 yields must be balanced against the strong rental market dynamics indicated by the 6-day DOM and 15.8% renter density.
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.