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 | $2,440 |
| 1 Bedroom | $2,720 |
| 2 Bedrooms | $3,360 |
| 3 Bedrooms | $4,260 |
| 4 Bedrooms | $4,770 |
| 5 Bedrooms | $5,533 |
| 6 Bedrooms | $6,197 |
| 7 Bedrooms | $6,693 |
| 8 Bedrooms | $7,028 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $2,720 | $420,928 | 0.65% | D |
| 2BR | $3,360 | $747,102 | 0.45% | F |
| 3BR | $4,260 | $1,286,633 | 0.33% | F |
| 4BR | $4,770 | $1,658,494 | 0.29% | F |
| 5BR | $5,533 | $2,290,554 | 0.24% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 91607 in Los Angeles, CA, reveals interesting insights into the potential returns for landlords and small-portfolio investors.
Firstly, using the Fair Market Rent (FMR) for a 2-bedroom apartment, which is $2760 annually for FY 2024, the implied gross yield can be calculated. This amount translates to a monthly rental income of $230, assuming the property is rented at the FMR. Given the median home value of $1,252,544, the annualized gross yield based on FMR would be approximately 0.22%. This calculation is derived from the formula: ($2760 / $1,252,544) * 100 = 0.22%.
Secondly, considering the market rent, known as the Zillow Observed Rental Index (ZORI), which stands at $2,775 per month, the annualized rental income would be $33,300. Using the same median home value, the gross yield based on market rent would be around 2.66%. This figure is obtained through the calculation: ($33,300 / $1,252,544) * 100 = 2.66%.
The stark difference between these two yields highlights the importance of understanding the local rental environment. With a renter density of 70.1%, it is clear that the majority of residents in ZIP 91607 prefer renting over owning. However, the N/A-day DOM (Days On Market) indicates incomplete data regarding how long properties typically stay on the market before being leased, which could affect the speed of rental income generation.
Given the high renter density, the scenario where market rents are achieved appears more realistic. Landlords should be aware that relying solely on Section 8 payments might result in significantly lower returns compared to the broader rental market. The gross yield based on market rent offers a more substantial return, aligning better with typical investment expectations in the area.
In conclusion, while the FMR-based gross yield of 0.22% is possible under strict Section 8 guidelines, the higher market rent yield of 2.66% reflects a more practical outlook for landlords and investors looking to maximize their returns in ZIP 91607.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.