Location: Los Angeles-Long Beach-Glendale, CA | Metro: Los Angeles-Long Beach-Glendale, CA HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $2,580 |
| 1 Bedroom | $2,890 |
| 2 Bedrooms | $3,560 |
| 3 Bedrooms | $4,520 |
| 4 Bedrooms | $5,050 |
| 5 Bedrooms | $5,858 |
| 6 Bedrooms | $6,561 |
| 7 Bedrooms | $7,086 |
| 8 Bedrooms | $7,440 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $2,890 | $468,178 | 0.62% | D |
| 2BR | $3,560 | $743,384 | 0.48% | F |
| 3BR | $4,520 | $987,309 | 0.46% | F |
| 4BR | $5,050 | $1,205,304 | 0.42% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis for ZIP code 91601 in Los Angeles, CA, is built around the discrepancy between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR is set at $2910, while the Zillow Observed Rent Index (ZORI) shows the average market rent at $2,687. This means that the FMR is higher than the market rent by $223, or approximately 8.3%. In a city where 83.3% of residents are renters, and the median income stands at $79,607, landlords can leverage this gap to their advantage.
The primary reason voucher tenants make this a yield play is because the government will cover the rent up to the FMR level. Even though the market rent is lower, landlords can still receive the higher FMR rate through the voucher program. This effectively allows landlords to charge above the local market rate without the risk of vacancy, making it a lucrative opportunity in an area where the median home value is $909,855. The high median home value suggests that the cost of living in the area is significantly elevated, which further justifies the higher rental rates supported by the voucher system.
However, accepting housing voucher tenants below open-market rates does come with costs. Landlords must ensure that their properties meet the Housing Quality Standards (HQS) required by the Section 8 program. Additionally, there might be administrative burdens and potential delays in receiving rent payments. Despite these challenges, the financial benefits of receiving the higher FMR rate can outweigh the costs, especially when considering the strong demand for rentals in Los Angeles.
In conclusion, the gap between the FMR and the market rent in ZIP 91601 presents a clear opportunity for landlords and small-portfolio investors to enhance their yields. By participating in the Section 8 voucher program, they can secure rental income at a rate higher than what the market currently offers, thus maximizing returns in a highly competitive and expensive rental market.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). Demographics from U.S. Census (2024).
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.