Location: Hot Springs, AR | Metro: Hot Springs, AR MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $860 |
| 1 Bedroom | $860 |
| 2 Bedrooms | $1,110 |
| 3 Bedrooms | $1,420 |
| 4 Bedrooms | $1,600 |
| 5 Bedrooms | $1,856 |
| 6 Bedrooms | $2,079 |
| 7 Bedrooms | $2,245 |
| 8 Bedrooms | $2,357 |
The analysis of the Section 8 cap rate for ZIP code 71914 in Unknown, Arkansas, requires an understanding of the financial mechanics involved. The Fair Market Rent (FMR) for a two-bedroom apartment in this area for fiscal year 2024 is set at $1010 per month. This figure annualizes to $12,120 per year.
Cap rate, or capitalization rate, is a ratio used to estimate the potential return on investment based on the property's income. It is calculated by dividing the net operating income (NOI) by the property's purchase price. In the context of Section 8 properties, the gross yield can be estimated by considering the annual rental income against the median home value. However, the median home value for ZIP 71914 is currently not available, making it difficult to provide a precise cap rate calculation. Without this information, we cannot accurately state the implied gross-yield for the scenario involving the Section 8 FMR.
In the absence of specific market rent data, we must rely on the Section 8 FMR to derive a rough estimate of the gross-yield. Given that the market rent is also not available, it is challenging to compare this directly with a non-Section 8 scenario. Typically, market rents can vary significantly from the FMR, and without knowing the exact market rent for 71914, any comparison would be speculative.
Considering the unknowns regarding the median home value and market rent, the most realistic scenario for determining the gross-yield would involve using the actual market conditions and data. If the median home value were known, it would allow us to calculate a more accurate gross-yield, which is essential for making informed investment decisions. Additionally, the lack of specific renter density and days on market (DOM) data complicates the analysis further, as these factors influence the occupancy rates and the speed at which a property can be rented out.
To proceed with a more concrete analysis, obtaining the median home value and market rent for ZIP 71914 would be necessary. These figures, combined with the known FMR, would provide a clearer picture of the gross-yield potential for both Section 8 and market-rate scenarios, enabling investors to make a more 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.