Location: Evansville, IN | Metro: Evansville, IN MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $880 |
| 1 Bedroom | $880 |
| 2 Bedrooms | $1,140 |
| 3 Bedrooms | $1,400 |
| 4 Bedrooms | $1,550 |
| 5 Bedrooms | $1,798 |
| 6 Bedrooms | $2,014 |
| 7 Bedrooms | $2,175 |
| 8 Bedrooms | $2,284 |
The analysis of the Section 8 cap-rate picture for ZIP code 47736 in Unknown, Indiana, reveals some key insights despite limited data availability. The Fair Market Rent (FMR) for a two-bedroom property in fiscal year 2024 is set at $1090 per month. To annualize this figure, we multiply it by 12, resulting in an annualized FMR of $13,080.
Given that the median home value for ZIP 47736 is not available, we cannot calculate an exact gross yield based on home values. However, we can still compare the annualized FMR against hypothetical market rents. The market rent for the area is also listed as N/A, which further complicates the calculation of a precise gross yield. Nonetheless, if we assume that market rents would be higher than the FMR, the gross yield derived from Section 8 would be lower compared to a market-rent scenario.
To illustrate, let's consider a hypothetical market rent of $1200 per month, which is common in many areas. This would annualize to $14,400, leading to a higher gross yield when compared to the Section 8 FMR of $13,080. The gross yield is calculated by dividing the annual rent by the purchase price or median home value. Since the median home value is not provided, we can only state that the gross yield from Section 8 would be lower due to the lower rent amount.
The renter density for ZIP 47736 is listed as N/A, which means we do not have specific information on how many residents are likely to be renters. Similarly, the days on market (DOM) for rental properties is also not available. These missing data points make it challenging to determine the most realistic scenario for potential investors.
Despite these limitations, it is clear that the gross yield from participating in the Section 8 program would be lower than what could potentially be achieved through market rents. Investors should consider the stability and reliability of Section 8 tenants versus the higher rent potential of market-rate rentals when making investment decisions.
In conclusion, while the exact cap-rate cannot be determined due to missing data, the gross yield from Section 8 rents is lower than what could be obtained from market rates. The decision between the two options should be made based on the investor's risk tolerance and preference for stable income over potentially higher yields.
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.