Location: Lincoln County, MS | Metro: Jackson, MS HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $750 |
| 1 Bedroom | $760 |
| 2 Bedrooms | $920 |
| 3 Bedrooms | $1,120 |
| 4 Bedrooms | $1,200 |
| 5 Bedrooms | $1,392 |
| 6 Bedrooms | $1,559 |
| 7 Bedrooms | $1,684 |
| 8 Bedrooms | $1,768 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 39668 reveals some interesting insights for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a two-bedroom apartment in fiscal year 2024 is set at $900 per month. When annualized, this translates to a yearly rental income of $10,800.
To calculate the implied gross yield, we use the median home value of $149,434. With an annual rental income of $10,800, the gross yield for a property rented at the FMR would be approximately 7.24%. This calculation is based on the formula: Gross Yield = (Annual Rental Income / Property Value) * 100.
In contrast, the market rent for ZIP code 39668 is currently not available. However, if we were to assume that the market rent is higher than the FMR, the gross yield would also increase accordingly. For example, if the market rent were $1,100 per month, the annual rental income would be $13,200, leading to a gross yield of approximately 8.84%.
Given the 2.8% renter density in the area, it's important to note that the demand for rental properties, particularly those under Section 8, may be limited. Additionally, the lack of data regarding the days on market (DOM) suggests that the local rental market might not be as active or well-documented, making it challenging to predict how quickly a property could be leased.
The scenario using the FMR of $900 per month appears more realistic due to the low renter density. While the market rent scenario offers a higher gross yield, the difficulty in finding tenants willing to pay above the FMR in a low-density rental market could offset these gains. Landlords should consider the balance between higher potential yields and the risk of extended vacancy periods when deciding on their rental strategy.
Implied Gross Yields:
Investors should use these gross yields as a starting point for their own calculations, considering factors such as operating expenses, vacancy rates, and property management costs to determine the net operating income (NOI).
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.