Location: Tampa-St. Petersburg-Clearwater, FL | Metro: Tampa-St. Petersburg-Clearwater, FL MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,440 |
| 1 Bedroom | $1,490 |
| 2 Bedrooms | $1,730 |
| 3 Bedrooms | $2,210 |
| 4 Bedrooms | $2,690 |
| 5 Bedrooms | $3,120 |
| 6 Bedrooms | $3,494 |
| 7 Bedrooms | $3,774 |
| 8 Bedrooms | $3,963 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 33771, Largo, Florida, reveals interesting insights into potential investment returns. The Fair Market Rent (FMR) for a 2-bedroom apartment in FY 2024 is set at $1960 annually, while the Zillow Observed Rent Index (ZORI) stands at $1,659 per month. To calculate the gross yield, we first annualize these figures. For the FMR, the annual rent is already provided at $1960. For the ZORI, multiplying the monthly rent by 12 gives an annual rent of $19,908.
Given the median home value in the area is $254,565, we can derive the gross yield for both scenarios. In the case of the FMR, the gross yield is calculated as follows: ($1960 / $254,565) * 100 = 0.77%. For the ZORI-based scenario, the gross yield is: ($19,908 / $254,565) * 100 = 7.82%. This stark difference highlights the financial disparity between accepting Section 8 tenants versus market-rate renters.
The 35.5% renter density in Largo suggests that there is a significant portion of the population who might be interested in Section 8 housing, making it a viable option for landlords. However, the 74-day Days on Market (DOM) indicates that properties may take longer to rent out compared to areas with lower DOM figures. Given these factors, the ZORI-based gross yield of 7.82% is likely more realistic for most landlords, as it aligns with the higher rental demand and quicker turnover rates seen in the local market. Accepting Section 8 tenants would result in a much lower gross yield of 0.77%, which is less attractive due to the lower rental income relative to property value.
Investors should consider the trade-offs between the stability and guaranteed income from Section 8 tenants versus the potentially higher returns and faster occupancy from market-rate rentals. While Section 8 can offer steady cash flow, the significantly lower gross yield makes it a less appealing choice for those seeking higher returns on investment.
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.