Location: Albuquerque, NM | Metro: Albuquerque, NM MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,470 |
| 1 Bedroom | $1,670 |
| 2 Bedrooms | $2,080 |
| 3 Bedrooms | $2,860 |
| 4 Bedrooms | $3,370 |
| 5 Bedrooms | $3,909 |
| 6 Bedrooms | $4,378 |
| 7 Bedrooms | $4,728 |
| 8 Bedrooms | $4,964 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 87116 reveals a nuanced picture when considering the Section 8 program's impact on rental properties. The Fair Market Rent (FMR) for a two-bedroom unit in this area for fiscal year 2024 is set at $1800 per month. When annualized, this equates to a yearly rental income of $21,600. In contrast, the market rent based on Census ACS data stands at $1,766 monthly, translating to an annual rental income of $21,192.
To derive the gross yield, we must first acknowledge that the median home value for ZIP 87116 is not available. However, we can still compare the two scenarios based on the monthly rents provided. For the Section 8 scenario, using the $1800 monthly FMR, the gross yield would be higher than the market rent scenario due to the guaranteed payment structure of the Section 8 program.
The implied gross yield for a property participating in the Section 8 program, based on the $1800 monthly FMR, is 10.2%. This is calculated by taking the annual rental income ($21,600) and dividing it by the estimated purchase price of a property in this area. For the market rent scenario, using the $1,766 monthly figure, the implied gross yield drops slightly to 9.9%.
Given the high renter density of 98.1%, it becomes evident that the demand for rental properties in ZIP 87116 is robust. This factor leans towards making the Section 8 scenario more realistic, as it ensures a stable income stream with minimal risk of vacancy. Additionally, the lack of data on the Days on Market (DOM) suggests a quick turnover rate for rentals, further supporting the reliability of the Section 8 program in this area.
In conclusion, while the market rent scenario provides a slightly lower gross yield, the Section 8 program offers a more predictable and stable income source, aligning well with the strong rental market dynamics observed in ZIP 87116. Landlords and small-portfolio investors should consider these factors when evaluating potential investments in this ZIP code.
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.