Section 8 Fair Market Rent (FMR) for ZIP 28246 - 2027

FY 2027 Fair Market Rent Rates

The analysis of the Section 8 cap-rate scenario for ZIP code 28246 in North Carolina reveals a few key points that are critical for landlords and small-portfolio investors.

In ZIP 28246, the Fair Market Rent (FMR) for a 2-bedroom apartment in fiscal year 2024 is set at an annualized rate of $1650. This figure represents the total amount a landlord could expect to receive annually through the Section 8 program for a 2-bedroom unit. However, without specific data on the median home value and market rent, it's challenging to provide a precise cap-rate calculation. Nonetheless, we can still infer some implications based on the available information.

The implied gross yield for a property in ZIP 28246 participating in the Section 8 program would be calculated by dividing the annual rental income by the median home value. Given the lack of median home value data, let's assume a hypothetical median home value of $200,000 for illustrative purposes. In this case, the gross yield would be approximately 0.825%, calculated as $1650 divided by $200,000. This low yield is indicative of the limited profitability potential when relying solely on Section 8 rents.

Comparatively, if we had the market rent data, we could calculate a gross yield that reflects the potential income from non-subsidized tenants. The absence of this data means we cannot directly compare the yields, but it's reasonable to infer that market rents would typically offer a higher gross yield than the subsidized rates. For instance, if the market rent were significantly above the FMR, say $1800 per month, the annual market rent would be $21,600. Using the same median home value of $200,000, the gross yield would then be 10.8%, clearly demonstrating a much stronger return on investment.

Given the lack of specific renter density and Days on Market (DOM) figures, it's difficult to determine the exact likelihood of finding a tenant who qualifies for the Section 8 program versus a market-rate tenant. However, the stark difference in gross yields suggests that, unless there is a high demand for Section 8 housing in the area, landlords might find it more financially beneficial to seek market-rate tenants.

To summarize, while the Section 8 program provides a guaranteed rent of $1650 annually for a 2-bedroom unit, the implied gross yield is significantly lower compared to what could potentially be achieved with market-rate tenants. This makes the latter option more attractive for maximizing returns, assuming the local rental market supports higher rates.

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.