Section 8 Fair Market Rent (FMR) for ZIP 90095 - 2027

FY 2027 Fair Market Rent Rates

To determine if a landlord should buy in ZIP code 90095 for Section 8 purposes, follow this decision tree based on the provided data.

Step 1: Does the Fair Market Rent (FMR) of $2540 cover the debt service on a property?

• Yes: If the FMR of $2540 is sufficient to cover the monthly mortgage payment and other expenses associated with owning the property, proceed to Step 2.
• No: If the FMR does not cover these costs, purchasing a property in ZIP 90095 for Section 8 is not financially viable.
• It Depends: Without specific property details such as size, location, and financing terms, it's impossible to definitively say whether the FMR will cover the debt service. Research individual properties to make an informed decision.

Step 2: Is the market rent above, at, or below the FMR?

• Above FMR: If the market rent is higher than the FMR, landlords can potentially earn additional income by renting to non-Section 8 tenants. However, this also means fewer Section 8 vouchers might be available to cover the full rent.
• At FMR: If the market rent matches the FMR, landlords can expect to fully utilize Section 8 vouchers without needing to subsidize the rent. This scenario provides stable income but limits potential for higher market rents.
• Below FMR: If the market rent is lower than the FMR, landlords might find it easier to attract tenants using Section 8 vouchers. However, they could miss out on higher rental income from the market.

Step 3: Do the percentage of renters and the days on market indicate sufficient demand?

• Yes: If there is a high percentage of renters and a low number of days on market, it suggests strong demand for rental properties. Landlords can expect to fill vacancies quickly and maintain occupancy rates.
• No: If the percentage of renters is low and the days on market are high, there is insufficient demand. Landlords may struggle to keep units occupied and could face financial difficulties.
• It Depends: The exact threshold for sufficient demand varies by market conditions. Analyze trends over time and compare with neighboring areas to gauge the potential stability of rental demand.

Ultimately, the decision to purchase in ZIP 90095 for Section 8 investment hinges on the answers to these steps. Landlords must ensure that the FMR covers their costs, understand the relationship between market rents and the FMR, and assess the local demand for rental properties.

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.