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 Section 8 thesis for real estate investments in ZIP code 90637 is based on the discrepancy between the Fair Market Rent (FMR) and the actual market rent. The FMR for ZIP 90637 in fiscal year 2024 is set at $2540. However, the market rent data is currently unavailable, which suggests that the actual rental prices might be higher or lower than the FMR.
If the market rent exceeds the FMR, landlords can expect to receive a subsidy that covers the difference between the voucher amount and the actual rent charged, making it a yield play. Voucher tenants provide a guaranteed income stream backed by the government, reducing the risk of vacancy and non-payment. This is particularly advantageous in an area where the median home value and median income figures are unknown, implying potential economic variability.
In contrast, if the market rent is below the FMR, landlords might still find value in accepting Section 8 tenants. The stability of rental income and the assurance of timely payments can offset the lower rents. In ZIP 90637, where the percentage of renters is unknown, the presence of a reliable tenant base can be beneficial for property owners and small-portfolio investors looking to maintain consistent cash flow.
The gap between the FMR and market rent must be quantified to fully understand the financial implications. When the FMR is higher than the market rent, landlords benefit from the difference, enhancing their investment yields. Conversely, if the market rent is higher, landlords must decide whether to accept the subsidized rate or seek higher-paying market-rate tenants, weighing the risks and rewards accordingly.
In summary, the Section 8 program in ZIP 90637 offers a unique opportunity for landlords and investors to leverage government subsidies for rental income. The exact financial impact depends on the relationship between the FMR and market rent, but the program's guarantees can serve as a stabilizing factor in an uncertain economic environment.
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.