Location: Redding, CA | Metro: Redding, CA MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,060 |
| 1 Bedroom | $1,100 |
| 2 Bedrooms | $1,440 |
| 3 Bedrooms | $1,990 |
| 4 Bedrooms | $2,410 |
| 5 Bedrooms | $2,796 |
| 6 Bedrooms | $3,132 |
| 7 Bedrooms | $3,383 |
| 8 Bedrooms | $3,552 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate scenario for ZIP code 96017 reveals some interesting insights. The Fair Market Rent (FMR) for a 2-bedroom apartment in this area for fiscal year 2024 is set at $1280 per month. This translates into an annualized income of $15,360. Meanwhile, the market rent for a similar property, based on Census ACS data, stands at $1,018 per month, resulting in an annual income of $12,216.
To derive the implied gross yield, we need to consider the median home value. Unfortunately, the median home value for ZIP 96017 is currently not available. However, we can still provide a comparison using the available rental figures.
If we assume that the median home value is consistent with typical investment properties in the area, the FMR-based annual income would suggest a higher gross yield compared to the market rent. Specifically, the FMR scenario would imply a gross yield of approximately 10.02% if the median home value were around $153,300, while the market rent scenario would indicate a gross yield of about 8.0% if the median home value were around $152,700.
Given the 31.4% renter density in ZIP 96017, it's important to note that a significant portion of residents are already renters. This could suggest a robust demand for rental properties, including those participating in the Section 8 program. However, the lack of data regarding the average days on market (DOM) makes it difficult to assess the speed at which properties might be rented out under either scenario.
In conclusion, the FMR scenario presents a higher gross yield, which could be attractive for landlords and small-portfolio investors looking to maximize returns. However, the actual performance will depend on factors such as the availability of homes, the local economy, and the specific terms of the Section 8 contracts. It's advisable to conduct further due diligence to ensure the chosen strategy aligns with your investment goals and risk tolerance.
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.