Location: Grant County, NM | Metro: Grant County, NM
| Unit Size | Monthly FMR |
|---|---|
| Studio | $820 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $1,070 |
| 3 Bedrooms | $1,290 |
| 4 Bedrooms | $1,680 |
| 5 Bedrooms | $1,949 |
| 6 Bedrooms | $2,183 |
| 7 Bedrooms | $2,358 |
| 8 Bedrooms | $2,476 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 88025 reveals some key insights into potential investment opportunities. The Fair Market Rent (FMR) for a two-bedroom apartment in this area for fiscal year 2026 is set at $1,050 annually. However, without a specific median home value or market rent data, it's challenging to provide a precise cap rate calculation. Let's break down the available information.
First, considering the annualized 2BR FMR of $1,050, we can derive an implied gross yield based on the typical relationship between rental income and property value. Assuming a median home value in line with national averages, say around $300,000, the implied gross yield would be approximately 4.2%. This figure is calculated by dividing the annual rental income ($1,050 * 12 = $12,600) by the median home value ($300,000).
Second, if we were to consider market rents, the lack of specific data makes it impossible to calculate an exact gross yield. However, in markets where Section 8 rates are significantly below market rents, the gross yield could be much lower, potentially around 2-3%, depending on the actual market conditions. This scenario would imply that the rental income from Section 8 tenants might only cover a portion of the mortgage and operating expenses, leading to a less attractive investment proposition.
Given the 0.0% renter density in ZIP 88025, it suggests that very few residents in this area are likely to be Section 8 participants. This low density implies that finding eligible tenants could be challenging, which may affect the long-term viability of relying solely on Section 8 rents. Additionally, the N/A-day Days on Market (DOM) indicates incomplete data, which further complicates the analysis and highlights the need for more detailed local market information.
In conclusion, while the implied gross yield of 4.2% based on the FMR is straightforward, the absence of market rent and median home value data makes it difficult to assess the true cap rate. Given the low tenant density, the FMR-based scenario may be overly optimistic. Investors should seek additional local data to refine these estimates and make informed decisions.
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.