Location: Adams County, OH | Metro: Adams County, OH
| Unit Size | Monthly FMR |
|---|---|
| Studio | $800 |
| 1 Bedroom | $900 |
| 2 Bedrooms | $1,070 |
| 3 Bedrooms | $1,360 |
| 4 Bedrooms | $1,460 |
| 5 Bedrooms | $1,694 |
| 6 Bedrooms | $1,897 |
| 7 Bedrooms | $2,049 |
| 8 Bedrooms | $2,151 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 45650 reveals some critical insights into the potential returns for landlords and small-portfolio investors. Using the annualized Fair Market Rent (FMR) for a 2-bedroom unit at $1,040 and the Census Bureau's reported market rent of $786, we can derive the gross yields under each scenario.
In the case of the FMR, the annual rental income would be $1,040 multiplied by 12 months, resulting in $12,480 per year. This translates to a gross yield of approximately 8.5%, calculated by dividing the annual rental income by the median home value of $146,941. For the market rent, the annual rental income would be $786 multiplied by 12 months, equating to $9,432 per year. This results in a gross yield of about 6.4% when divided by the median home value.
The difference between these two gross yields is significant, with the FMR-based scenario offering a higher return of 8.5% compared to the market rent-based scenario at 6.4%. However, the choice of which scenario is more realistic depends heavily on the local rental market dynamics and the proportion of renters in the area.
The ZIP code 45650 has a renter density of 37.4%, which suggests that nearly 4 out of every 10 households are renters. This relatively high percentage indicates a substantial demand for rental properties, including those under the Section 8 program. The fact that the Days on Market (DOM) is listed as N/A could imply either a very quick turnover rate or a lack of comprehensive data regarding how long it takes to find a tenant, particularly one participating in the Section 8 program.
Given the high renter density, it is reasonable to assume that there is a robust demand for affordable housing options such as Section 8 units. Therefore, the higher gross yield of 8.5% based on the FMR might be more achievable in practice. However, investors should also consider the potential challenges and administrative overhead associated with the Section 8 program, which can affect the net operating income (NOI).
In conclusion, while the market rent-based gross yield of 6.4% provides a conservative estimate, the FMR-based gross yield of 8.5% reflects a potentially more realistic scenario due to the strong presence of renters in the area. Nonetheless, investors must conduct thorough due diligence to account for all factors influencing the actual returns from Section 8 properties.
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.