Location: Charlotte-Concord-Gastonia, NC | Metro: Charlotte-Concord-Gastonia, NC-SC HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,670 |
| 1 Bedroom | $1,740 |
| 2 Bedrooms | $1,890 |
| 3 Bedrooms | $2,310 |
| 4 Bedrooms | $2,940 |
| 5 Bedrooms | $3,410 |
| 6 Bedrooms | $3,819 |
| 7 Bedrooms | $4,125 |
| 8 Bedrooms | $4,331 |
The Section 8 cap rate analysis for ZIP code 28281 in North Carolina is based on the Fair Market Rent (FMR) for a two-bedroom apartment, which is set at $1650 annually for fiscal year 2024. However, the median home value and market rent figures are currently unavailable, leading to some uncertainty in the analysis.
In the scenario where we use the annualized FMR of $1650, the implied gross yield can be calculated once the median home value is known. The gross yield represents the ratio of rental income to the property's value. Without the median home value, it is impossible to provide a precise gross yield figure. But assuming a typical property value, the gross yield would be lower compared to market rents due to the capped nature of Section 8 payments.
The second scenario, involving market rent, is also inconclusive without specific figures. Market rent tends to reflect the actual rental rates commanded in the local real estate market. If the market rent were higher than the Section 8 FMR, the gross yield would naturally be greater. This scenario is generally more favorable for landlords and small-portfolio investors because it allows for potentially higher cash flows.
The lack of data on renter density and days on market (DOM) further complicates the analysis. Renter density indicates the proportion of renters in the area, while DOM reflects how quickly properties are rented out. These metrics help determine the demand for rental properties and the likelihood of maintaining occupancy levels, crucial factors for assessing the viability of a Section 8 investment.
Given the incomplete data, the market rent scenario is more likely to present a realistic picture for most investors. It accounts for the dynamic nature of the real estate market and provides a benchmark for potential returns. However, the exact cap rate and gross yield cannot be determined without the median home value and market rent figures. Investors should gather these specifics to make informed decisions.
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.