Location: Phoenix-Mesa-Chandler, AZ | Metro: Phoenix-Mesa-Chandler, AZ MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,080 |
| 1 Bedroom | $1,170 |
| 2 Bedrooms | $1,380 |
| 3 Bedrooms | $1,870 |
| 4 Bedrooms | $2,120 |
| 5 Bedrooms | $2,459 |
| 6 Bedrooms | $2,754 |
| 7 Bedrooms | $2,974 |
| 8 Bedrooms | $3,123 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 85337 reveals a significant difference between the federal market rent (FMR) for a two-bedroom apartment under Section 8 at $1570 per month and the current market rent at $1,069 per month based on the latest Census ACS data. To derive the gross yield, we annualize these figures against the median home value of $228,629.
First, let's consider the Section 8 scenario. With an FMR of $1570 per month, the annualized rent would be $18,840. Dividing this by the median home value gives us an implied gross yield of approximately 8.24%. This means that if a property were rented exclusively through Section 8 at the FMR, it would generate a yearly income of 8.24% of the home's value.
Next, looking at the market rent scenario, where the monthly rent is $1,069, the annualized rent would be $12,828. When compared to the median home value, this translates into an implied gross yield of roughly 5.61%. Thus, renting at market rates would produce a yearly income of 5.61% of the home's value.
The stark contrast between the two yields—8.24% for Section 8 versus 5.61% for market rent—suggests that Section 8 properties could potentially offer higher returns for landlords and small-portfolio investors. However, the actual gross yield will depend on the specific property and its operating expenses.
A key factor in determining the likelihood of achieving these yields is the renter density, which stands at 37.1% for ZIP 85337. Given this relatively high percentage of renters, there is a strong demand for rental housing in the area, which supports the viability of both market and Section 8 rents. However, the lack of data on days on market (DOM) makes it difficult to assess how quickly properties might be leased, especially under Section 8, where the process can sometimes be longer due to the nature of the program.
In conclusion, while the potential gross yield is higher for Section 8 properties, the market rent scenario still offers a respectable return. Landlords should weigh these figures against their own costs and the local rental market dynamics to determine the most profitable strategy for their investments in ZIP 85337.
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.