Location: Riverside-San Bernardino-Ontario, CA | Metro: Riverside-San Bernardino-Ontario, CA MSA
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 | $1,640 |
| 1 Bedroom | $1,740 |
| 2 Bedrooms | $2,150 |
| 3 Bedrooms | $2,830 |
| 4 Bedrooms | $3,410 |
| 5 Bedrooms | $3,956 |
| 6 Bedrooms | $4,431 |
| 7 Bedrooms | $4,785 |
| 8 Bedrooms | $5,024 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,150 | $394,522 | 0.54% | F |
| 3BR | $2,830 | $576,550 | 0.49% | F |
| 4BR | $3,410 | $618,482 | 0.55% | F |
| 5BR | $3,956 | $686,102 | 0.58% | F |
U.S. Census Bureau data (2024)
In evaluating ZIP 92301 (Grand Terrace, CA) for investment opportunities under the Section 8 program, several key concerns arise regarding financial feasibility, tenant demand, and voucher coverage.
Objection 1: Will Fair Market Rent (FMR) of $2030 (for zip FY 2024) cover the mortgage on a $587,319 home?
The FMR of $2030 is a critical figure for determining whether a property can be rented out through the Section 8 program profitably. For a home valued at $587,319, the monthly mortgage payment will depend on the interest rate and loan terms. Assuming a typical 30-year fixed-rate mortgage with an average interest rate of around 5%, the monthly principal and interest payment would be approximately $3050. This means that the FMR of $2030 would not fully cover the mortgage payment. However, landlords can still make a profit by factoring in other income sources such as tax benefits and low vacancy rates associated with Section 8 properties.
Objection 2: Is there enough renter demand at 35.6%?
A rental rate of 35.6% indicates that slightly over one-third of the housing units in Grand Terrace are occupied by renters. This percentage suggests a moderate level of demand but does not guarantee high occupancy rates. To ensure profitability, it's essential to consider the local job market and population trends. While the data does not provide a detailed breakdown of these factors, a 35.6% rental rate implies a steady pool of potential tenants. Additionally, the Section 8 program typically attracts a consistent number of applicants, which can help maintain high occupancy levels despite the moderate overall rental rate.
Objection 3: Will vouchers keep pace with market rents of $2,131?
The market rent of $2,131 is significantly higher than the FMR of $2030. This gap highlights a potential challenge for landlords who rely solely on Section 8 vouchers to cover their costs. The U.S. Department of Housing and Urban Development (HUD) periodically adjusts the FMR based on economic conditions and housing costs, but it may not always align perfectly with the market rents. Landlords must weigh the benefits of stable long-term tenancy against the possibility of lower income compared to market rents. It's also worth noting that some landlords supplement the voucher amount with additional rent from tenants, if permissible by local regulations.
To conclude, while the FMR of $2030 might not fully cover the mortgage on a $587,319 home, the Section 8 program offers tax advantages and reduced vacancy risks. The 35.6% rental rate suggests a viable demand, although it's important to consider the broader economic context. Lastly, the discrepancy between the FMR and market rents of $2,131 requires careful planning to ensure profitability. Investors should consult with local HUD offices and real estate professionals to understand the specific dynamics of the Grand Terrace market.
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.