Location: Cleveland, OH | Metro: Cleveland, OH HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $830 |
| 1 Bedroom | $940 |
| 2 Bedrooms | $1,140 |
| 3 Bedrooms | $1,460 |
| 4 Bedrooms | $1,570 |
| 5 Bedrooms | $1,821 |
| 6 Bedrooms | $2,040 |
| 7 Bedrooms | $2,203 |
| 8 Bedrooms | $2,313 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 44049 provides valuable insights into potential investment opportunities. The Fair Market Rent (FMR) for a 2-bedroom apartment in this area, as set by HUD for FY 2024, is $980 per month. When annualized, this equates to an income of $11,760 annually. Given the median home value of $144,778, the implied gross yield for a property rented under Section 8 would be approximately 8.1%. This is calculated by dividing the annual rental income ($11,760) by the median home value ($144,778).
In contrast, the market rent for a 2-bedroom apartment in ZIP 44049, based on Census ACS data, is $950 per month. Annualizing this figure yields an annual income of $11,400. Using the same median home value, the implied gross yield under market conditions would be about 7.9%. This is derived by dividing the annual market rent ($11,400) by the median home value ($144,778).
The slight edge in gross yield for Section 8 properties over market rentals suggests that, at first glance, Section 8 might offer a marginally better return on investment. However, the reality is more nuanced. With a renter density of 30.6%, it's clear that a significant portion of the population in ZIP 44049 does not rent, which could impact the demand for rental units, including those participating in the Section 8 program.
The N/A-day Days on Market (DOM) indicates that there is insufficient data to determine how quickly rental properties turn over. This lack of information makes it difficult to assess the stability and predictability of rental income streams, whether under Section 8 or market conditions. For landlords and small-portfolio investors, the consistency of cash flow is often as important as the gross yield itself.
In conclusion, while Section 8 offers a slightly higher gross yield compared to market rents, the actual performance will depend on factors such as the stability of tenant occupancy and the overall demand for rental housing in ZIP 44049. Investors should carefully consider these variables when making decisions about their investment strategies.
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.