Location: Oakland-Fremont, CA | Metro: Oakland-Fremont, 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 | $1,970 |
| 1 Bedroom | $2,160 |
| 2 Bedrooms | $2,650 |
| 3 Bedrooms | $3,390 |
| 4 Bedrooms | $4,020 |
| 5 Bedrooms | $4,663 |
| 6 Bedrooms | $5,223 |
| 7 Bedrooms | $5,641 |
| 8 Bedrooms | $5,923 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,650 | $604,110 | 0.44% | F |
| 3BR | $3,390 | $743,667 | 0.46% | F |
| 4BR | $4,020 | $887,992 | 0.45% | F |
| 5BR | $4,663 | $959,961 | 0.49% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 94805 (Richmond, CA) reveals a challenging investment scenario when compared to market rents. For a two-bedroom property, the Fair Market Rent (FMR) under Section 8 for FY 2024 is set at $2360 per month, while the market rent, as indicated by the Zillow Observed Rent Index (ZORI), stands at $2,484 per month.
To derive the gross yield, we annualize these figures. The annualized FMR for Section 8 is $28,320 ($2360 x 12 months), and the annualized market rent is $29,808 ($2,484 x 12 months). Given the median home value in ZIP 94805 is $702,946, the implied gross yield for a Section 8 tenant is approximately 4.03%, calculated by dividing the annualized FMR by the median home value. In contrast, the gross yield based on market rent is slightly higher at 4.24%, calculated similarly by using the annualized market rent figure.
Despite the marginal difference between the two yields, the reality of investing in Richmond, CA, leans towards the Section 8 scenario being more representative. This is due to the high renter density of 33.6%, indicating a substantial portion of the population relies on rental assistance programs such as Section 8. Furthermore, the N/A-day Days on Market (DOM) suggests that properties may take longer to rent out without such assistance, making the Section 8 option more practical for landlords and small-portfolio investors.
In conclusion, while the market rent offers a marginally better gross yield, the actual rental environment in ZIP 94805 points to a more realistic expectation of achieving a 4.03% gross yield through Section 8 tenants. This analysis underscores the importance of aligning investment strategies with the local rental market dynamics.
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.