Location: Los Angeles-Long Beach-Glendale, CA | Metro: Los Angeles-Long Beach-Glendale, CA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $2,150 |
| 1 Bedroom | $2,400 |
| 2 Bedrooms | $2,960 |
| 3 Bedrooms | $3,760 |
| 4 Bedrooms | $4,200 |
| 5 Bedrooms | $4,872 |
| 6 Bedrooms | $5,457 |
| 7 Bedrooms | $5,894 |
| 8 Bedrooms | $6,189 |
The analysis for ZIP code 90507 reveals incomplete data points critical for a precise Section 8 cap-rate assessment. The Federal Market Rent (FMR) for a 2-bedroom apartment, set at $2540 annually for FY 2024, is known. However, the median home value and current market rent for the area remain unspecified, complicating a direct comparison.
To calculate the gross yield, we require the median home value. Given the absence of this figure, we can only provide a conceptual framework. If we hypothetically assume a median home value of $600,000, based on typical market conditions, the annualized FMR of $2540 would imply a gross yield of approximately 0.42%. This calculation is rudimentary and assumes the entire property value is leveraged for rental income.
In the absence of market rent data, it's impossible to derive a comparative gross yield. Typically, market rents exceed FMRs, suggesting a higher gross yield under normal market conditions. For instance, if the market rent were $3000 per month, this would represent a significant increase over the FMR and potentially a gross yield of around 6%, assuming the same median home value of $600,000.
The lack of specific renter density and days on market (DOM) data for ZIP 90507 further complicates the analysis. Renter density influences demand, while DOM reflects supply dynamics. Without these metrics, it's challenging to determine which scenario is more realistic. However, the disparity between the hypothetical gross yields highlights the financial impact of relying solely on Section 8 versus capturing market rents.
Landlords and small-portfolio investors should consider the potential for higher returns when market rents are available and competitive. While Section 8 provides stable income, the opportunity cost of foregoing market rates could be substantial. Therefore, understanding local rental market dynamics is crucial for maximizing investment 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.