Location: Riverside-San Bernardino-Ontario, CA | Metro: Riverside-San Bernardino-Ontario, CA MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,560 |
| 1 Bedroom | $1,650 |
| 2 Bedrooms | $2,040 |
| 3 Bedrooms | $2,690 |
| 4 Bedrooms | $3,240 |
| 5 Bedrooms | $3,758 |
| 6 Bedrooms | $4,209 |
| 7 Bedrooms | $4,546 |
| 8 Bedrooms | $4,773 |
Start with the question: Does the Fair Market Rent (FMR) of $2,130 cover the debt service on a property?
If Yes: The next step is to evaluate the market rent. Is the market rent above, at, or below the FMR of $2,130?
If Above: This indicates a strong rental market where non-Section 8 tenants might be willing to pay more than the FMR. However, for Section 8 properties, the focus remains on whether the FMR alone can support the investment. Given the FMR covers the debt service, it's viable but consider the potential for higher returns with non-Section 8 tenants.
If At: This means the market rent aligns with the FMR. It suggests a balanced market where Section 8 properties can be rented out at fair rates, supporting the investment without the risk of over-renting. Proceed with confidence knowing the FMR meets the debt service.
If Below: A market rent below the FMR signals a weak rental market. This could mean difficulty in finding non-Section 8 tenants willing to pay the FMR. Despite this, if the FMR still covers the debt service, Section 8 properties remain a stable option. However, the lower market rent might affect overall profitability.
If No: The FMR of $2,130 does not cover the debt service on a property. This makes the investment unviable from a financial standpoint as it would result in a loss even when fully rented under the Section 8 program. Do not proceed with buying properties in ZIP 92415 for Section 8.
The final consideration involves assessing the demand. Are the percentages of renters and days on the market (DOM) sufficient to ensure enough demand for Section 8 properties?
If the percentage of renters is high and DOM is low: This suggests a robust demand for rentals, including Section 8 properties. High renter percentages indicate a preference for renting over owning, while low DOM implies quick turnover and strong interest from potential tenants.
If the percentage of renters is moderate and DOM is moderate: This scenario indicates a stable but not highly dynamic market. There is demand, but it may fluctuate. Investment can proceed cautiously, keeping an eye on market trends and tenant preferences.
If the percentage of renters is low and DOM is high: This points to a weak demand for rentals. High DOM suggests difficulty in attracting tenants, which could extend to Section 8 tenants. In such a case, investment in Section 8 properties is risky and should be reconsidered.
In conclusion, the viability of purchasing properties in ZIP 92415 for Section 8 hinges on whether the FMR of $2,130 clears debt service, the relationship between market rent and FMR, and the strength of rental demand. Use these criteria to make informed decisions.
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.