Location: Yuma, AZ | Metro: Yuma, AZ MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $950 |
| 1 Bedroom | $950 |
| 2 Bedrooms | $1,250 |
| 3 Bedrooms | $1,710 |
| 4 Bedrooms | $2,090 |
| 5 Bedrooms | $2,424 |
| 6 Bedrooms | $2,715 |
| 7 Bedrooms | $2,932 |
| 8 Bedrooms | $3,079 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 85349 reveals a significant difference between the federally determined Fair Market Rent (FMR) and the actual market rent, impacting potential gross yields for real estate investments.
The Fair Market Rent for a two-bedroom apartment in ZIP 85349 for FY 2024 is set at $1080 per month. When annualized, this equates to $12,960 per year. In contrast, the Census ACS data indicates that the current market rent for a similar unit is $727 per month, or $8,724 annually. These figures provide the basis for calculating the implied gross yield under both scenarios.
Using the median home value of $261,382 as a reference point, we can derive the gross yields. For the FMR scenario, the gross yield would be approximately 5%. This calculation is derived from dividing the annualized FMR rent by the median home value: $12,960 / $261,382 = 0.0496, or roughly 5%. On the other hand, the gross yield based on the market rent would be around 3.3%, calculated by dividing the annualized market rent by the median home value: $8,724 / $261,382 = 0.0334, or about 3.3%.
Given the 30.8% renter density in ZIP 85349, it's important to consider the likelihood of finding tenants who qualify for Section 8 housing assistance. The renter density suggests a moderate tenant pool, but the N/A-day Days on Market (DOM) indicates that there might be challenges in accurately assessing the speed at which properties are rented out, especially those relying on Section 8 vouchers.
The higher gross yield implied by the FMR scenario is more attractive on paper; however, it may not be as realistic due to the strict qualification process for Section 8 tenants and potential delays in securing long-term leases. Meanwhile, the lower gross yield based on market rent reflects a more immediate and stable rental income stream, assuming the property is rented to non-Section 8 tenants.
In conclusion, while the Section 8 program offers a gross yield of approximately 5%, the more realistic market-based gross yield of around 3.3% should be considered when evaluating investment opportunities in ZIP 85349. Landlords and small-portfolio investors must weigh these figures against the operational complexities and time required to secure Section 8 tenants versus the ease and quicker turnover of renting to the general market.
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.