Location: Fort Smith, AR | Metro: Fort Smith, AR-OK MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $750 |
| 1 Bedroom | $760 |
| 2 Bedrooms | $990 |
| 3 Bedrooms | $1,340 |
| 4 Bedrooms | $1,640 |
| 5 Bedrooms | $1,902 |
| 6 Bedrooms | $2,130 |
| 7 Bedrooms | $2,300 |
| 8 Bedrooms | $2,415 |
The analysis of the Section 8 cap-rate picture for ZIP code 72917 in Unknown, Arkansas, reveals some critical insights for landlords and small-portfolio investors. The Federal Market Rent (FMR) for a 2-bedroom apartment in fiscal year 2024 is set at $900 per month. This translates into an annualized income of $10,800 for a property under the Section 8 program.
However, the market rent for similar properties is not available, nor is the median home value for the area. Without these key metrics, it's challenging to provide a direct comparison between Section 8 rents and market rents. Nonetheless, the implied gross yield can still be derived from the FMR alone.
In the absence of market rent data, we cannot calculate a precise gross yield for non-Section 8 properties. However, if we were to assume that market rent would typically exceed the FMR, then the gross yield for Section 8 properties would likely be lower than that of market-rent properties. For example, if the market rent for a 2BR unit were hypothetically $1,200 per month, the annualized market rent would be $14,400, leading to a higher gross yield compared to the $10,800 annualized under Section 8.
The lack of specific data on renter density and days on market (DOM) further complicates the analysis. These figures are crucial in understanding how quickly units are rented and the competition for tenants in the area. If the renter density is low, it might indicate a slower rental market, making the days on market a significant factor. Conversely, a high renter density could mean faster turnover and potentially more demand for affordable housing options.
To conclude, while the annualized Section 8 rent provides a stable and predictable income source at $10,800 per year, the absence of market rent and median home value data means that the comparative gross yield remains unclear. Investors should consider the stability and predictability of Section 8 rents versus the potential for higher yields from market rents, though the latter comes with greater volatility and uncertainty. Given the incomplete data, the Section 8 scenario offers a more concrete and reliable financial projection for ZIP 72917.
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.