Location: Spartanburg, SC | Metro: Spartanburg, SC HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,040 |
| 1 Bedroom | $1,080 |
| 2 Bedrooms | $1,180 |
| 3 Bedrooms | $1,440 |
| 4 Bedrooms | $1,700 |
| 5 Bedrooms | $1,972 |
| 6 Bedrooms | $2,209 |
| 7 Bedrooms | $2,386 |
| 8 Bedrooms | $2,505 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 29338 provides insight into potential investment opportunities in the area. To begin, let's annualize the Fair Market Rent (FMR) for a two-bedroom unit, which stands at $1140 for fiscal year 2024. This figure represents the monthly rental assistance amount that a landlord could receive through the Section 8 program.
In terms of gross yield, if we assume the median home value is $228,000 (based on the FMR being approximately 5% of the median home value), the annualized FMR would be $13,680 ($1140 x 12 months). The gross yield, calculated as the annual rent divided by the property value, would then be 6%. However, since the actual median home value for ZIP 29338 is not provided, this scenario serves only as an illustrative example.
Moving to the second scenario, where we consider market rents instead of FMRs, the data indicates that the market rent is not available (N/A). Without this information, it's impossible to calculate an accurate gross yield based on market conditions. However, given that 100% of the population in this ZIP code are renters, it suggests a high demand for rental properties, which typically supports higher market rents compared to FMRs.
The Days on Market (DOM) figure is also not available (N/A), which means we cannot assess how quickly properties are rented out in this area. A lower DOM generally indicates a strong rental market, but without this data point, we must rely on other indicators such as renter density.
Given the high renter density, it's reasonable to infer that the market rent would likely exceed the FMR, potentially leading to a higher gross yield. For instance, if market rents were 10% above the FMR, the annual rent would be $15,048, resulting in a gross yield of approximately 6.6%, assuming the same property value as our first scenario. This slight increase underscores the importance of understanding local market conditions over relying solely on government-set rates.
In conclusion, while the exact cap rate cannot be determined due to missing data on median home values and market rents, the high renter density points towards a robust rental market. Investors should seek to understand the local market dynamics to make informed decisions, particularly focusing on actual market rents rather than FMRs to achieve a more accurate gross yield calculation.
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.