Location: Ann Arbor, MI | Metro: Ann Arbor, MI MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,460 |
| 1 Bedroom | $1,500 |
| 2 Bedrooms | $1,800 |
| 3 Bedrooms | $2,160 |
| 4 Bedrooms | $2,370 |
| 5 Bedrooms | $2,749 |
| 6 Bedrooms | $3,079 |
| 7 Bedrooms | $3,325 |
| 8 Bedrooms | $3,491 |
The analysis for ZIP code 48107 in Michigan reveals a challenging environment for Section 8 investments due to limited data availability. For a two-bedroom unit, the Fair Market Rent (FMR) set by HUD for fiscal year 2024 is $1470 per month. However, the market rent for the area is currently unreported, as is the median home value, which hinders a precise valuation of potential investment properties.
To derive an approximate cap rate, we must first annualize the FMR. This yields an annual rental income of $17,640 for a two-bedroom property. Without a specific market rent figure, we cannot provide a direct comparison to the FMR. The lack of median home value data also means we cannot calculate a gross yield based on property purchase price, leaving us with only the FMR-based scenario to consider.
In the scenario where a landlord relies solely on the FMR for a two-bedroom unit, the annualized rental income would be $17,640. Given the absence of data regarding the typical home values and the percentage of renters in the area, it's difficult to ascertain the exact gross yield. However, if we assume a common purchase price range for homes in similar areas, the gross yield could vary significantly. For example, if a median home value were hypothetically $200,000, the gross yield would be approximately 8.82%. If the median home value were $300,000, the gross yield would drop to about 5.88%.
The unavailability of key metrics such as renter density and days on market (DOM) further complicates the analysis. Typically, a higher renter density and lower DOM suggest a stronger rental market, which could support higher rents. Conversely, lower renter density and higher DOM might indicate a softer rental market, making it harder to achieve rents above the FMR.
Given the incomplete data, the most realistic scenario is likely one where the landlord adheres to the FMR, yielding an annual income of $17,640. This scenario provides a baseline for evaluating the potential returns on investment in ZIP 48107. Landlords and small-portfolio investors should seek additional local market insights to refine their investment strategies and understand the risks associated with this area.
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.