Location: Hawaii County, HI | Metro: Hawaii County, HI
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $2,250 |
| 1 Bedroom | $2,270 |
| 2 Bedrooms | $2,920 |
| 3 Bedrooms | $3,680 |
| 4 Bedrooms | $4,080 |
| 5 Bedrooms | $4,733 |
| 6 Bedrooms | $5,301 |
| 7 Bedrooms | $5,725 |
| 8 Bedrooms | $6,011 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $2,270 | $408,082 | 0.56% | F |
| 2BR | $2,920 | $690,444 | 0.42% | F |
| 3BR | $3,680 | $903,401 | 0.41% | F |
| 4BR | $4,080 | $1,048,553 | 0.39% | F |
U.S. Census Bureau data (2024)
A skeptical investor looking into ZIP 96738, Waikoloa, HI, might have several concerns regarding the feasibility of investing in Section 8 properties. Here are some key objections and the data to consider:
Objection 1: Will Fair Market Rent (FMR) of $2,830 (metro FY 2026) cover the mortgage on an $832,209 home?
The Fair Market Rent (FMR) of $2,830 per month for ZIP 96738 is the maximum amount that HUD will pay for a rental unit. To determine if this covers the mortgage, we must calculate the monthly mortgage payment. Assuming a 30-year fixed-rate mortgage at an average interest rate of 4.5%, the monthly principal and interest payment on an $832,209 home would be approximately $4,100. This means that the FMR does not cover the mortgage payment, leaving a shortfall of $1,270 per month. An investor would need to find additional sources of income or reduce costs to make this investment viable.
Objection 2: Is there enough renter demand at 30.2%?
The percentage of renter-occupied housing units in ZIP 96738 stands at 30.2%. While this indicates a significant portion of the population rents, it may not be sufficient to ensure a steady stream of Section 8 tenants. The data does not specify how many of these renters are eligible for Section 8 assistance, which is crucial for determining the potential demand for subsidized housing. However, the relatively low percentage suggests that competition among landlords for Section 8 tenants could be high, potentially affecting vacancy rates and the speed at which units can be filled.
Objection 3: Will vouchers keep pace with $3,133 market rents?
The market rent in ZIP 96738 is estimated at $3,133 per month, which exceeds the FMR by $303. Vouchers are designed to help low-income families afford housing at market rates, but they are capped at the FMR. If a landlord sets the rent above the FMR, the tenant would need to pay the difference out of pocket, which may not be feasible for many voucher holders. Therefore, while vouchers can provide a subsidy, they may not fully cover the market rent, leading to financial strain on tenants or the need for landlords to accept lower rents to attract voucher holders.
In conclusion, while ZIP 96738 offers opportunities for Section 8 investments, careful consideration of the data reveals potential challenges. The FMR does not fully cover the mortgage on a typical home, the renter demand is moderate, and vouchers may not keep up with market rents. These factors should be weighed against the potential benefits of such investments, including government subsidies and stable long-term tenancy.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.