Location: Charlottesville, 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 |
The Section 8 cap-rate analysis for ZIP code 24581 presents a unique challenge due to the limited availability of specific market data. To provide a comprehensive overview, we must rely on the Fair Market Rent (FMR) for a two-bedroom apartment, which is set at $1270 annually for fiscal year 2024. However, without a precise median home value or market rent figure, it's difficult to calculate an exact cap rate.
In the scenario where we use the annualized 2BR FMR of $1270, we can infer that the gross yield would be relatively low. This is because the FMR represents the maximum amount that a landlord can charge for rent under the Section 8 program, which is typically lower than market rates. The lack of a median home value makes it impossible to calculate the exact percentage yield, but it's safe to say that the gross yield would be modest, reflecting the government-set limits on rental income.
If we hypothetically consider a market rent figure, the gross yield would likely be higher than the FMR scenario. Market rents are generally determined by supply and demand dynamics and can exceed the FMR, providing a better return on investment. However, the absence of a specific market rent figure means that this calculation remains speculative.
Given the N/A% renter density and the N/A-day days on market (DOM), it's challenging to determine which scenario is more realistic. A higher renter density might suggest a stronger preference for rental properties over homeownership, potentially increasing the appeal of Section 8 units. Conversely, a longer DOM could indicate that properties are harder to lease, possibly reducing the attractiveness of Section 8 participation.
To conclude, while the FMR provides a stable but lower-income stream, market rents offer the potential for higher returns. Investors should weigh these factors carefully, considering the stability of Section 8 versus the variability of market rents. The decision will also depend on the local real estate market conditions, including the actual renter density and leasing trends, which are currently unknown for ZIP 24581.
Data Sources: FMR data from HUD (2027).
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.