Location: Nevada County, CA | Metro: Sacramento--Roseville--Arden-Arcade, CA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,710 |
| 1 Bedroom | $1,860 |
| 2 Bedrooms | $2,410 |
| 3 Bedrooms | $3,310 |
| 4 Bedrooms | $3,980 |
| 5 Bedrooms | $4,617 |
| 6 Bedrooms | $5,171 |
| 7 Bedrooms | $5,585 |
| 8 Bedrooms | $5,864 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 96161 (Truckee, CA) reveals some critical insights for landlords and small-portfolio investors. Using the Fair Market Rent (FMR) for a 2-bedroom apartment set at $2690 per month for FY 2024, the annualized rental income comes to $32,280. Against the median home value of $1,014,752, this implies a gross yield of approximately 3.2%. This calculation is based on the assumption that a property valued at $1,014,752 could be rented out as a 2-bedroom unit.
In contrast, the Zillow Observed Rent Index (ZORI) indicates a market rent of $4,399 per month for the same type of unit. Annualizing this figure yields an annual rental income of $52,788. When compared to the median home value, this translates into a gross yield of about 5.2%, significantly higher than the FMR-based scenario.
To determine which scenario is more realistic, consider the local rental market dynamics. Truckee has a relatively low renter density of 24.1%, suggesting that most residents are homeowners rather than renters. Additionally, the days on market (DOM) for rental properties stands at 56 days, indicating a competitive market where properties are occupied relatively quickly. Given these factors, the ZORI-based gross yield of 5.2% appears more plausible, as it aligns with the actual market conditions observed in Truckee.
The lower FMR-based gross yield of 3.2% might reflect the subsidized nature of Section 8 rents, which are designed to be affordable for low-income tenants. However, it does not accurately represent the potential returns in a market where demand for rentals is strong and properties can command higher rates.
In conclusion, while the FMR provides a baseline for what landlords might expect from Section 8 tenants, the market reality suggests that achieving a gross yield closer to 5.2% is feasible. This higher yield is more reflective of the current rental market conditions in Truckee, considering the quick turnover of rental properties and the overall housing market trends.
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.