Location: Glenn County, CA | Metro: Glenn County, CA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $910 |
| 1 Bedroom | $1,000 |
| 2 Bedrooms | $1,310 |
| 3 Bedrooms | $1,800 |
| 4 Bedrooms | $2,170 |
| 5 Bedrooms | $2,517 |
| 6 Bedrooms | $2,819 |
| 7 Bedrooms | $3,045 |
| 8 Bedrooms | $3,197 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 95943 reveals interesting insights into potential investment yields. To begin with, using the annualized Fair Market Rent (FMR) for a 2-bedroom unit at $1,350, the implied gross yield can be calculated. Given the median home value of $715,449, the gross yield based on the FMR would be approximately 0.75%. This calculation is derived by taking the annual rent ($1,350 x 12 months = $16,200) and dividing it by the median home value ($715,449).
On the other hand, considering the market rent of $854 per month, the implied gross yield drops significantly. The annual market rent for a 2-bedroom unit is $10,248 ($854 x 12), leading to a gross yield of about 1.43% when divided by the median home value. However, this figure must be critically examined in light of the ZIP code's 40.7% renter density and the fact that the days on market (DOM) is not available.
The lower gross yield based on the FMR suggests that properties in ZIP 95943 might not be as profitable for Section 8 investors compared to those rented at market rates. Nevertheless, the higher gross yield based on market rents does not fully reflect the reality of the rental market dynamics. With a significant portion of the population renting, the competition for tenants could be high, making it challenging to consistently achieve market rents. Furthermore, the lack of DOM data implies that properties might not turn over quickly enough to ensure steady cash flow.
In conclusion, while the market rent scenario presents a more attractive gross yield, the FMR-based yield is more reflective of the actual income potential for Section 8 investors. The 40.7% renter density indicates a robust demand for rental housing, but it also points towards a competitive environment where achieving and maintaining market rents could be difficult. Therefore, for a conservative investment strategy, the FMR-based gross yield of 0.75% should be considered the baseline, with the market rent scenario offering a potentially optimistic upper bound at 1.43%.
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.