Location: Provo-Orem-Lehi, UT | Metro: Provo-Orem-Lehi, UT MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,540 |
| 1 Bedroom | $1,550 |
| 2 Bedrooms | $1,770 |
| 3 Bedrooms | $2,450 |
| 4 Bedrooms | $2,960 |
| 5 Bedrooms | $3,434 |
| 6 Bedrooms | $3,846 |
| 7 Bedrooms | $4,154 |
| 8 Bedrooms | $4,362 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 84013 reveals an interesting dynamic between federal market rent (FMR) and market rent levels. The annualized FMR for a 2-bedroom unit in ZIP 84013 for FY 2024 is set at $1050, while the Census ACS reports the market rent for a similar unit at $1,063. Given the median home value of $538,896, we can derive the implied gross yield for both scenarios.
Starting with the FMR scenario, the annual rental income would be $1050 multiplied by 12 months, totaling $12,600 per year. Dividing this figure by the median home value of $538,896 yields an implied gross yield of approximately 2.34%. This calculation provides a baseline for the potential rental income under the Section 8 program.
In contrast, using the market rent figure of $1,063, the annual rental income increases slightly to $12,756 per year. When this amount is divided by the median home value, the implied gross yield rises to about 2.37%. This marginal increase reflects the higher market rent compared to the FMR, suggesting a slight advantage for landlords who can secure market rent rates.
Given the 8.9% renter density in ZIP 84013, it's important to consider how many units are realistically occupied by renters, particularly those participating in the Section 8 program. The N/A-day DOM (days on market) indicates that there isn't enough data to determine the average time it takes to lease a property, which could mean either strong demand or a lack of consistent leasing activity.
The gross yield difference between the FMR and market rent is minimal, indicating that the primary driver of rental income in ZIP 84013 is the base rent level rather than the specific program under which the tenant rents. However, the FMR scenario is more likely to be representative of the actual rental income for properties participating in the Section 8 program due to the fixed nature of FMRs. Landlords should factor in the administrative overhead and potential delays associated with the Section 8 program when considering the overall profitability of their investments.
In summary, the implied gross yield for ZIP 84013 under the Section 8 program is approximately 2.34%, while the market rent scenario offers a slightly higher yield of 2.37%. Given the limited renter density and the absence of DOM data, the FMR-based yield is a more conservative and realistic expectation for landlords looking to invest in this area through the Section 8 program.
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.