Location: Lake County, CA | Metro: Lake County, CA
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 | $1,560 |
| 1 Bedroom | $1,580 |
| 2 Bedrooms | $2,060 |
| 3 Bedrooms | $2,850 |
| 4 Bedrooms | $3,400 |
| 5 Bedrooms | $3,944 |
| 6 Bedrooms | $4,417 |
| 7 Bedrooms | $4,770 |
| 8 Bedrooms | $5,009 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,060 | $249,699 | 0.82% | C |
| 3BR | $2,850 | $329,514 | 0.86% | C |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 95426, Middletown, CA, hinges on two key figures: the Fair Market Rent (FMR) and the median home value. The annualized 2BR FMR for fiscal year 2026 is set at $2,010, while the median home value stands at $287,238.
To calculate the implied gross yield, we first need to understand the relationship between these values. The FMR represents the maximum rent that a property can charge under the Section 8 program. For a median-priced home in Middletown, CA, this translates into an annual rental income of $2,010. Dividing this figure by the median home value gives us an implied gross yield of approximately 0.7%. This calculation is straightforward:
Implied Gross Yield = ($2,010 / $287,238) * 100 ≈ 0.7%
This yield is based solely on the FMR and does not account for potential market rents. However, the market rent for 2BR properties in ZIP 95426 is listed as N/A, which means there's no reliable data available for this metric. Without accurate market rent figures, it's challenging to provide a second scenario for the gross yield. But if we were to assume that market rents are higher than the FMR, the gross yield would naturally increase, making the investment more attractive.
Given the low renter density of 2.6%, it's important to note that the demand for rental units, particularly those participating in the Section 8 program, might be limited. This factor could influence the actual occupancy rates and thus the effective gross yield. Additionally, the N/A-day Days on Market (DOM) suggests that there is no recent trend data available for how quickly rental properties are being leased in this area, which adds another layer of uncertainty to the analysis.
In conclusion, the implied gross yield based on the FMR is approximately 0.7%. This figure is significantly lower than what most investors would consider acceptable for a real estate investment. While market rents could potentially offer a better yield, the lack of specific data makes it impossible to accurately estimate this alternative scenario. The low renter density and uncertain DOM trends further complicate the investment outlook, suggesting that landlords and small-portfolio investors should proceed with caution when considering Section 8 participation in Middletown, CA.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.