Location: Sacramento--Roseville--Arden-Arcade, CA | Metro: Sacramento--Roseville--Arden-Arcade, CA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,720 |
| 1 Bedroom | $1,770 |
| 2 Bedrooms | $2,170 |
| 3 Bedrooms | $2,850 |
| 4 Bedrooms | $3,280 |
| 5 Bedrooms | $3,805 |
| 6 Bedrooms | $4,262 |
| 7 Bedrooms | $4,603 |
| 8 Bedrooms | $4,833 |
The analysis for ZIP code 95860 in California reveals a complex picture regarding the potential for Section 8 properties in terms of capitalization rates (cap rates). To start, let's annualize the Fair Market Rent (FMR) for a two-bedroom unit, which stands at $2030 per month for fiscal year 2024. This translates into an annual rent of $24,360.
However, without a specific median home value or market rent data for ZIP 95860, it's challenging to provide a precise cap rate. The implied gross yield based solely on the FMR would be calculated using the formula: Gross Yield = Annual Rent / Property Value. Given that the median home value is not available, we cannot accurately determine the gross yield in this scenario.
To illustrate the impact of market conditions on the gross yield, consider if we hypothetically had a median home value of $300,000. The gross yield would then be approximately 8.12% ($24,360 / $300,000). This calculation assumes the property value aligns closely with the median home value, which might not always be the case due to variations in property types and conditions.
In the absence of market rent data, it's also impossible to compare the gross yields between market rents and FMRs. Typically, market rents can exceed FMRs, potentially leading to higher gross yields for landlords outside of the Section 8 program. However, the benefits of Section 8, such as guaranteed payment and low vacancy rates, must also be considered.
The lack of data on renter density and days on market (DOM) further complicates the analysis. A high renter density could indicate a strong demand for rental housing, whereas a lower DOM suggests that properties are being rented quickly. These factors influence the attractiveness of the area for investment but require specific figures to draw definitive conclusions.
Given the incomplete data set, the most realistic scenario would involve conducting a thorough local market analysis to understand the actual median home values and market rents. This would allow for a more accurate calculation of the cap rate and gross yield, providing landlords and small-portfolio investors with the necessary information to make informed decisions about investing in Section 8 properties in ZIP 95860.
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.