Location: North Port-Bradenton-Sarasota, FL | Metro: North Port-Bradenton-Sarasota, FL MSA
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $2,500 |
| 1 Bedroom | $2,680 |
| 2 Bedrooms | $3,130 |
| 3 Bedrooms | $3,970 |
| 4 Bedrooms | $4,730 |
| 5 Bedrooms | $5,487 |
| 6 Bedrooms | $6,145 |
| 7 Bedrooms | $6,637 |
| 8 Bedrooms | $6,969 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $3,130 | $666,208 | 0.47% | F |
| 3BR | $3,970 | $662,538 | 0.6% | F |
| 4BR | $4,730 | $829,768 | 0.57% | F |
| 5BR | $5,487 | $1,169,468 | 0.47% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 34240 in Sarasota, Florida, reveals interesting insights into the potential returns for landlords and small-portfolio investors. To begin, let's consider the Fair Market Rent (FMR) for a 2-bedroom unit, which is set at $2430 annually according to the FY 2024 data. This translates to a monthly rental income of approximately $202.50 under the Section 8 program. In contrast, the market rent, as indicated by ZORI (Zillow Observed Rent Index), stands at $2,283 per month.
To calculate the implied gross yield, we use the median home value of $744,394. For the FMR scenario, the annual rental income would be $2430, resulting in an implied gross yield of roughly 0.326%. The formula for this calculation is:
Gross Yield = Annual Rental Income / Property Value
Applying the same logic to the market rent scenario, the annual rental income would be $27,396 ($2,283 multiplied by 12 months), leading to an implied gross yield of about 3.68%. These calculations provide a stark comparison between the two rental scenarios.
Given the 18.2% renter density in ZIP 34240, it's important to note that the majority of homeowners in this area likely own their homes rather than renting them out. Additionally, the 45-day Days on Market (DOM) indicates that properties are typically rented out relatively quickly once listed. However, this metric does not directly influence the cap rate calculation.
In terms of realism, the market rent scenario offers a much higher gross yield compared to the Section 8 scenario. While the Section 8 program provides stable income and is beneficial for ensuring affordable housing, it does not offer the financial returns that landlords and small-portfolio investors might seek. The 3.68% gross yield from market rents is significantly more attractive, especially when considering the property values and typical rental behaviors in the area.
Investors should weigh these figures carefully, considering the trade-offs between guaranteed rental income through Section 8 and potentially higher yields from market rentals. The decision ultimately depends on the investor's risk tolerance and investment goals.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.