Location: South Bend-Mishawaka, IN | Metro: South Bend-Mishawaka, IN HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $940 |
| 1 Bedroom | $1,100 |
| 2 Bedrooms | $1,280 |
| 3 Bedrooms | $1,550 |
| 4 Bedrooms | $1,680 |
| 5 Bedrooms | $1,949 |
| 6 Bedrooms | $2,183 |
| 7 Bedrooms | $2,358 |
| 8 Bedrooms | $2,476 |
To decide whether you should buy in ZIP code 46634 for Section 8 investments, follow this decision tree:
1) Does FMR $1020 (ZIP FY 2024) clear debt service on a property?
Yes: If your property's debt service is less than $1020 per month, then the Fair Market Rent (FMR) for 46634 can cover your costs. Proceed to the next question.
No: If your property's debt service exceeds $1020 per month, then relying solely on Section 8 tenants will not be financially viable. Do not invest in this ZIP code for Section 8 properties.
It Depends: If your property's debt service is close to $1020, consider other income streams or subsidies that might help bridge the gap. Also, look into how much of the $1020 goes towards utilities and if there are any additional allowances that could increase your effective rental income.
2) Is market rent above, at, or below FMR?
Above FMR: If the market rent is higher than the FMR of $1020, you may find it difficult to attract Section 8 tenants since they can only pay up to the FMR. This makes the ZIP code less attractive for Section 8 investments.
At FMR: If the market rent matches the FMR, Section 8 tenants can afford the rent without financial strain. This scenario is ideal for Section 8 investments.
Below FMR: If the market rent is below the FMR, you can still attract Section 8 tenants, but you may also face competition from non-Section 8 tenants who are willing to pay the lower market rate. Consider the potential for vacancy rates.
3) Are renters' demand and days on market (DOM) sufficient?
Sufficient Demand: If the percentage of renters is high and the DOM is low, indicating strong demand for rentals, then investing in Section 8 properties is advisable. High demand means you'll likely fill vacancies quickly.
Insufficient Demand: If the percentage of renters is low and the DOM is high, then the area lacks sufficient demand for rentals. This makes it risky to invest in Section 8 properties due to potential vacancy issues.
It Depends: If the demand is moderate, evaluate other factors such as property values, crime rates, and access to public services. These elements can influence the overall attractiveness of the investment.
Note: Specific percentages for renters and DOM were not provided. Ensure you gather these metrics to make an informed decision.
Data Sources: FMR data from HUD (2027).
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.