Section 8 Fair Market Rent (FMR) for ZIP 91395 - 2027

FY 2027 Fair Market Rent Rates

The analysis for ZIP code 91395 in California reveals incomplete data points necessary for a precise Section 8 cap-rate calculation. To provide a rough picture, we'll annualize the Fair Market Rent (FMR) for a two-bedroom unit, which is set at $2540 for fiscal year 2024, and compare it against the market rent and median home value, both of which are not available.

In the scenario where the FMR is applied, the annual rental income would be $2540 multiplied by 12 months, resulting in an annual income of $30,480. Given that the median home value is not available, we cannot calculate the exact gross yield; however, it's important to note that the gross yield would be significantly lower than what might be expected from market rents due to the fixed nature of Section 8 payments.

Market rent data being unavailable means we can't compare the Section 8 rent to the prevailing market rates. Without this comparison, it's challenging to determine how competitive the Section 8 rent is relative to the market. The lack of median home value data further complicates the cap-rate calculation, as it is a critical component for estimating potential returns.

Despite these limitations, it's clear that the implied gross yield from using the Section 8 FMR would be substantially lower than what could potentially be achieved through market rents. This is because Section 8 rents are typically below market rates and do not fluctuate with market conditions.

The absence of specific renter density and days on market (DOM) data prevents a detailed assessment of the local rental market dynamics. However, it's generally understood that areas with higher renter density and shorter DOM periods tend to favor market rents over Section 8 rents, as there is a larger pool of tenants willing to pay market rates.

To conclude, while the exact cap rate cannot be determined due to missing data, the use of Section 8 FMRs would imply a lower gross yield compared to potential market rents. Landlords and small-portfolio investors should consider the fixed payment structure of Section 8 and the potential for higher yields through market rents when making investment decisions in ZIP 91395.

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.