Section 8 Fair Market Rent (FMR) for ZIP 95724 - 2027

FY 2027 Fair Market Rent Rates

The analysis for ZIP code 95724 in California reveals some key points about the potential for Section 8 properties in this area. However, due to limited data, the conclusions must be drawn carefully.

The Fair Market Rent (FMR) for a 2-bedroom apartment in ZIP 95724 for fiscal year 2024 is set at $2450 per month. To annualize this figure, we multiply by 12, resulting in an annual rental income of $29,400 if the property were rented exclusively under Section 8 contracts. This is based on the assumption that the property would be rented out for the entire year without any vacancy periods. The median home value in the area is not available, which complicates the calculation of the gross yield for market rents. Without this data, we cannot provide a direct comparison between the Section 8 scenario and market rent yields.

The implied gross yield for a Section 8 property can be estimated using the annualized FMR. Assuming a property value for the sake of illustration, let's use the hypothetical median home value of $400,000 (this is an illustrative figure since the actual median home value is not provided). The gross yield would then be calculated as follows:

• Gross Yield for Section 8 Property: $29,400 / $400,000 = 7.35%

This yield represents the percentage of the property's value that would be returned annually in rental income. However, it's important to note that this calculation does not account for operating expenses, taxes, insurance, or other costs that would affect the net operating income (NOI).

The lack of data on market rents means that we cannot calculate a precise gross yield for a non-Section 8 property. However, the absence of this data also suggests that market rents might be less predictable or competitive compared to the guaranteed income from Section 8 contracts. Given the uncertainty around market rents, the Section 8 contract offers a stable and calculable income stream.

The renter density and days on market (DOM) figures are also not available, which would normally help us assess the likelihood of finding tenants and the competitiveness of the rental market. In their absence, it's reasonable to lean towards the Section 8 scenario as more reliable, especially if the goal is to secure a steady income source.

In conclusion, while the exact gross yield for market rents remains unknown, the Section 8 scenario provides a clear and stable 7.35% gross yield based on the annualized FMR and our illustrative property value. This makes the Section 8 option a more tangible and less speculative investment choice for ZIP 95724.

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.