Location: Albuquerque, NM | Metro: Albuquerque, NM MSA
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $910 |
| 1 Bedroom | $1,070 |
| 2 Bedrooms | $1,320 |
| 3 Bedrooms | $1,840 |
| 4 Bedrooms | $2,160 |
| 5 Bedrooms | $2,506 |
| 6 Bedrooms | $2,807 |
| 7 Bedrooms | $3,032 |
| 8 Bedrooms | $3,184 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,070 | $210,271 | 0.51% | F |
| 2BR | $1,320 | $235,788 | 0.56% | F |
| 3BR | $1,840 | $274,799 | 0.67% | D |
| 4BR | $2,160 | $318,984 | 0.68% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 87102 in Albuquerque, NM, provides valuable insights into the investment potential of properties in this area. To begin, let's annualize the 2BR Fair Market Rent (FMR) for FY 2024, which stands at $1170 per month. This translates to an annual rental income of $14,040. Using the median home value of $246,719, we can calculate the implied gross yield for a Section 8 property as follows:
The implied gross yield for a Section 8 property would be approximately 5.69%. This is derived by dividing the annualized FMR ($14,040) by the median home value ($246,719).
Next, let's consider the market rent, represented by the Zillow Observed Rent Index (ZORI), which is $1,056 per month. This equates to an annual rental income of $12,672. Applying the same median home value, the implied gross yield for a market-rent property is about 5.14%.
Given the 64.6% renter density in ZIP 87102, it is clear that a significant portion of the population relies on rental housing. This high renter density supports the viability of both Section 8 and market-rent investments. However, the 28-day Days on Market (DOM) indicates a relatively quick turnover for rentals, suggesting a strong demand for affordable housing.
In this context, the Section 8 scenario with a gross yield of 5.69% appears more realistic. Landlords can expect a steady stream of rental income, backed by government subsidies, without the risk of vacancy. The higher gross yield also compensates for the administrative overhead associated with managing Section 8 properties.
While the market-rent scenario offers a slightly lower gross yield of 5.14%, it still represents a solid investment opportunity. However, the competitive nature of the rental market, indicated by the quick DOM, suggests that maintaining market rents might require ongoing efforts to attract and retain tenants.
To summarize, the Section 8 cap-rate scenario for ZIP 87102 offers a more stable and predictable investment with a gross yield of 5.69%. In contrast, the market-rent scenario, with a gross yield of 5.14%, requires a closer examination of tenant acquisition and retention strategies. Both options present opportunities, but the choice depends on the landlord's or investor's risk tolerance and management preferences.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.