Location: New Orleans-Metairie, LA | Metro: New Orleans-Metairie, LA HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,110 |
| 1 Bedroom | $1,250 |
| 2 Bedrooms | $1,500 |
| 3 Bedrooms | $1,930 |
| 4 Bedrooms | $2,260 |
| 5 Bedrooms | $2,622 |
| 6 Bedrooms | $2,937 |
| 7 Bedrooms | $3,172 |
| 8 Bedrooms | $3,331 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,250 | $193,831 | 0.64% | D |
| 2BR | $1,500 | $163,025 | 0.92% | C |
| 3BR | $1,930 | $162,916 | 1.18% | B |
| 4BR | $2,260 | $183,133 | 1.23% | A |
| 5BR | $2,622 | $216,318 | 1.21% | A |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 70117 in New Orleans, LA, provides a clear picture of the potential returns for landlords and small-portfolio investors. Using the Fair Market Rent (FMR) for a two-bedroom apartment at $1240 per month (annualized to $14,880) and the Zillow Observed Rent Index (ZORI) at $1,497 per month (annualized to $17,964), we can calculate the gross yields against the median home value of $169,285.
When using the FMR, the annual rental income is $14,880. This translates into a gross yield of approximately 8.8%. The calculation is straightforward: divide the annual rental income by the median home value. In this case, $14,880 / $169,285 = 0.088, or 8.8%. However, this scenario is less likely to reflect actual market conditions due to the lower rent figure compared to the observed market rent.
Using the ZORI, the annual rental income increases to $17,964. This results in a higher gross yield of about 10.6%, calculated as $17,964 / $169,285 = 0.106, or 10.6%. This figure is more reflective of what landlords might expect in terms of rental income from market rates.
The gross yield comparison between the FMR and ZORI scenarios highlights the disparity between government-set rents and market-driven rents. Given the 47.8% renter density in ZIP 70117, it is reasonable to assume that market conditions would favor the higher ZORI-based gross yield. The fact that the days on market (DOM) is listed as N/A suggests that either rental properties are turning over quickly or there is limited data available, which could indicate a competitive market environment where properties are rented out swiftly upon listing.
In conclusion, while the FMR-based gross yield stands at 8.8%, the ZORI-based gross yield is significantly higher at 10.6%. For most investors, the latter represents a more realistic expectation of rental income in ZIP 70117. This analysis underscores the importance of understanding local market dynamics when evaluating investment opportunities in the area.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.