Location: Phoenix-Mesa-Chandler, AZ | Metro: Phoenix-Mesa-Chandler, AZ MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,400 |
| 1 Bedroom | $1,500 |
| 2 Bedrooms | $1,740 |
| 3 Bedrooms | $2,300 |
| 4 Bedrooms | $2,550 |
| 5 Bedrooms | $2,958 |
| 6 Bedrooms | $3,313 |
| 7 Bedrooms | $3,578 |
| 8 Bedrooms | $3,757 |
The analysis of the Section 8 cap-rate picture for ZIP code 85385 in Arizona reveals some limitations due to incomplete data, specifically the lack of market rent figures and median home values. However, we can still provide a basic framework using the available Fair Market Rent (FMR) data.
For a two-bedroom property in ZIP 85385, the annualized FMR for FY 2024 is $1880. This figure represents the government-set maximum rental assistance amount per month for a household in this area. To calculate the implied gross yield based on this FMR, we would need the median home value. Since the median home value is not provided, we cannot calculate a precise gross yield percentage. However, if we hypothetically assume a median home value, the gross yield would be derived from dividing the annualized rent by the home value.
The absence of market rent data means that a direct comparison between the FMR and the actual market rates cannot be made. In general, market rents tend to exceed FMRs, leading to a lower implied gross yield when using FMRs compared to what might be achieved with market rents. Given the current data, the scenario using the FMR is less realistic for assessing potential investment returns because it does not reflect the true rental market dynamics.
To further refine our analysis, additional metrics such as the percentage of renters in the area and the days on market (DOM) would be beneficial. These factors influence the likelihood of finding tenants and the speed at which properties can be leased, impacting the overall investment strategy. Without these specific figures, we cannot provide a detailed commentary on the rental market's health in ZIP 85385.
In conclusion, while the FMR provides a baseline for rental assistance, it underestimates the potential gross yield that could be achieved with market rents. For a more accurate assessment, investors should seek out local real estate market reports to understand current rental trends and property values in ZIP 85385.
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.