Location: Tampa-St. Petersburg-Clearwater, FL | Metro: Tampa-St. Petersburg-Clearwater, FL MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,710 |
| 1 Bedroom | $1,760 |
| 2 Bedrooms | $2,050 |
| 3 Bedrooms | $2,620 |
| 4 Bedrooms | $3,180 |
| 5 Bedrooms | $3,689 |
| 6 Bedrooms | $4,132 |
| 7 Bedrooms | $4,463 |
| 8 Bedrooms | $4,686 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 34683 in Palm Harbor, FL, reveals some key insights for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a two-bedroom property in this area for FY 2024 is set at $2020 per month. When annualized, this translates to an income of $24,240. In contrast, the Zillow Observed Rent Index (ZORI) indicates a market rent of $1,795 per month, which annualizes to $21,540.
To derive the gross yield for each scenario, we use the median home value of $449,315 as our investment basis. For the FMR scenario, the gross yield is calculated as follows:
For the market rent scenario, the calculation is:
Given the 18.6% renter density in ZIP 34683 and the 43-day Days on Market (DOM), it's evident that the market rent scenario is more realistic. A higher DOM suggests that properties may take longer to lease, particularly if they are priced above the market rate. Additionally, the lower renter density implies a smaller pool of potential tenants, making it harder to attract Section 8 participants who might be willing to pay the higher FMR rate.
The difference between the two yields is significant, with the FMR-based gross yield being 5.39% compared to the market rent-based gross yield of 4.79%. While the FMR provides a benchmark for what is considered fair rental value, actual market conditions often dictate lower rents. Therefore, for investment purposes, relying on the market rent figure of $1,795 per month is more prudent. This aligns with the reality of the local rental market and the likelihood of securing tenants within a reasonable timeframe.
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.