Location: Albuquerque, NM | Metro: Albuquerque, NM MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $960 |
| 1 Bedroom | $1,090 |
| 2 Bedrooms | $1,360 |
| 3 Bedrooms | $1,870 |
| 4 Bedrooms | $2,200 |
| 5 Bedrooms | $2,552 |
| 6 Bedrooms | $2,858 |
| 7 Bedrooms | $3,087 |
| 8 Bedrooms | $3,241 |
The analysis of the Section 8 cap-rate picture for ZIP code 87115 in Unknown, New Mexico, reveals some key points about the potential returns for landlords and small-portfolio investors.
For the purposes of this analysis, we consider the Fair Market Rent (FMR) for a two-bedroom apartment, which is set at $1200 per month for fiscal year 2024. This translates to an annual rental income of $14,400. The median home value in ZIP 87115 is currently not available, nor is the exact market rent for comparably sized properties. However, we can still derive a rough cap-rate scenario based on the FMR.
The implied gross yield for a property rented under the Section 8 program would be calculated using the FMR as a basis. If we assume a typical home value in the area where the FMR is used as a proxy for rental income, the annualized FMR of $14,400 would represent the rental income component of the cap-rate calculation. Without a specific median home value, we cannot calculate an exact cap-rate figure, but we can infer that the gross yield would be relatively low compared to market rents, assuming they are higher.
Given the lack of market rent data, it's challenging to provide a direct comparison to the gross yield derived from the FMR. However, it's generally understood that market rents tend to exceed FMRs, suggesting a potentially higher gross yield for properties rented at market rates. The absence of detailed market rent figures for ZIP 87115 means that the FMR-based gross yield serves as a conservative estimate for potential rental income.
The renter density in ZIP 87115 is also not specified, making it difficult to gauge the likelihood of finding tenants willing to pay market rates versus those who qualify for Section 8 assistance. Similarly, the Days on Market (DOM) for rental listings is not available, which would typically help us understand how quickly properties are rented out at various price points. Both these factors are crucial for understanding the local rental market dynamics.
In conclusion, while the exact cap-rate cannot be determined without additional data, the FMR provides a baseline for calculating the gross yield at $14,400 annually. This figure should be considered alongside the potential for higher yields from market rents, once that information becomes available. The decision to participate in the Section 8 program versus renting at market rates should be made with careful consideration of the local rental market conditions, including tenant demand and rental listing performance.
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.