Location: Oakland-Fremont, CA | Metro: Oakland-Fremont, CA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $2,310 |
| 1 Bedroom | $2,530 |
| 2 Bedrooms | $3,100 |
| 3 Bedrooms | $3,970 |
| 4 Bedrooms | $4,700 |
| 5 Bedrooms | $5,452 |
| 6 Bedrooms | $6,106 |
| 7 Bedrooms | $6,594 |
| 8 Bedrooms | $6,924 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 94551 (Livermore, CA) reveals a stark contrast between the Federal Market Rent (FMR) and the market rent. For a two-bedroom unit, the annualized FMR for fiscal year 2024 is $2890, while the Zillow Observed Rent Index (ZORI) indicates a market rent of $3080 per month.
To derive the implied gross yield, we use the median home value of $1,015,199 as the basis for our calculations. The FMR scenario implies an annual gross income of $34,680 ($2890 x 12 months), resulting in a gross yield of approximately 3.4%. In contrast, the market rent scenario yields an annual gross income of $36,960 ($3080 x 12 months), leading to a gross yield of about 3.6%.
Given the 29.4% renter density and the average days on market (DOM) of 15 days, the market rent scenario appears more realistic. A lower DOM suggests that rental units are occupied quickly, reducing vacancy rates and increasing the likelihood of achieving the higher market rent. However, it's important to note that Section 8 rents are fixed and do not fluctuate with market conditions, making the FMR yield a more stable but lower return option.
While the difference in gross yield between the FMR and market rent scenarios is modest, at just 0.2%, the implications for cash flow and investment strategy can be significant. Landlords and small-portfolio investors should consider the trade-off between the stability offered by Section 8 rents and the potential for higher returns through market rents when evaluating properties in ZIP 94551.
Data Sources: FMR data from HUD (2027). 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.