Section 8 Fair Market Rent (FMR) for ZIP 89033 - 2027

FY 2027 Fair Market Rent Rates

The analysis of the Section 8 cap-rate picture for ZIP code 89033 in Nevada reveals some limitations due to incomplete data. However, we can still provide a framework for understanding potential yields based on available figures.

The Fair Market Rent (FMR) for a 2-bedroom apartment in ZIP 89033 for fiscal year 2024 is set at $1640 per month. To annualize this figure, we multiply it by 12, yielding an annual rent of $19,680. Assuming the median home value is not applicable (N/A), we cannot calculate a precise cap rate without knowing the purchase price or the property's value. Nevertheless, we can infer the gross yield if we assume the property's value is known or can be estimated.

In a scenario where the median home value is not available, let's consider the implications of using the FMR as a basis for calculating the gross yield. The gross yield is calculated as the annual rental income divided by the property's value. For instance, if a property in ZIP 89033 were valued at $300,000, the gross yield would be approximately 6.56% ($19,680 / $300,000).

Given that the market rent is also not applicable (N/A), we must acknowledge that this figure does not reflect the actual rental rates in the area, which could differ significantly. If market rents were higher, say $2,000 per month, the annualized rent would be $24,000. Using the same $300,000 valuation, the gross yield would then rise to 8% ($24,000 / $300,000).

The gross yield comparison between the FMR-based scenario and the hypothetical market rent scenario shows a clear difference. The FMR-based yield of 6.56% is lower than the potential market yield of 8%, indicating that relying solely on FMR might undervalue the property's earning potential.

However, the lack of specific data on renter density and days on market (DOM) makes it difficult to determine which scenario is more realistic. A higher renter density and shorter DOM suggest a more favorable rental market, potentially supporting higher market rents. Conversely, lower density and longer DOM indicate a less robust rental environment, aligning more closely with the FMR.

To conclude, while the exact cap rate cannot be determined due to missing data points, the gross yield comparison provides insight into the potential earnings under different assumptions. Investors should use these figures as a starting point for their own detailed calculations, considering local market conditions and property-specific details.

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.