Location: Little Rock-North Little Rock-Conway, AR | Metro: Little Rock-North Little Rock-Conway, AR HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $990 |
| 1 Bedroom | $990 |
| 2 Bedrooms | $1,150 |
| 3 Bedrooms | $1,540 |
| 4 Bedrooms | $1,860 |
| 5 Bedrooms | $2,158 |
| 6 Bedrooms | $2,417 |
| 7 Bedrooms | $2,610 |
| 8 Bedrooms | $2,741 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 72116 in North Little Rock, AR, provides a clear picture of potential returns for landlords and small-portfolio investors. Using the Fair Market Rent (FMR) for a two-bedroom apartment set at $1140 annually for Fiscal Year 2024, and the Zillow Observed Rent Index (ZORI) of $1,071, we can derive the gross yield against the median home value of $247,719.
The implied gross yield using the FMR is calculated as follows: ($1140 * 12) / $247,719 = $13,680 / $247,719 = 5.52%. This means that if a landlord were to rent out a property at the FMR, they would achieve an annualized gross yield of 5.52% based on the median home value in the area.
On the other hand, using the ZORI, the implied gross yield is: $1,071 * 12 / $247,719 = $12,852 / $247,719 = 5.20%. Thus, renting at the ZORI level would result in a slightly lower annualized gross yield of 5.20%.
Given the 38.8% renter density in ZIP 72116, it's important to note that the demand for rental properties is substantial. However, the N/A-day DOM (Days on Market) indicates that there might be challenges in accurately predicting how long it takes to lease a property, which could affect the overall yield. Despite this uncertainty, the higher FMR of $1140 presents a more favorable gross yield scenario compared to the ZORI of $1,071.
In conclusion, while both the FMR and ZORI offer insights into potential rental income, the FMR scenario provides a stronger gross yield of 5.52%, making it a more attractive option for landlords and small-portfolio investors looking to maximize returns in North Little Rock, AR. The ZORI scenario, with a gross yield of 5.20%, still offers a reasonable return but is slightly less advantageous.
Data Sources: FMR data from HUD (2027). 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.