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 | $1,880 |
| 1 Bedroom | $1,890 |
| 2 Bedrooms | $2,440 |
| 3 Bedrooms | $3,070 |
| 4 Bedrooms | $3,410 |
| 5 Bedrooms | $3,956 |
| 6 Bedrooms | $4,431 |
| 7 Bedrooms | $4,785 |
| 8 Bedrooms | $5,024 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,890 | $428,817 | 0.44% | F |
| 2BR | $2,440 | $650,174 | 0.38% | F |
| 3BR | $3,070 | $992,365 | 0.31% | F |
| 4BR | $3,410 | $1,409,978 | 0.24% | F |
| 5BR | $3,956 | $2,163,251 | 0.18% | F |
U.S. Census Bureau data (2024)
The analysis of ZIP code 96740, located in Kailua Kona, HI, reveals several key points for landlords and small-portfolio investors.
The first question addresses whether the rent math works. The Fair Market Rent (FMR) for the metro area in fiscal year 2026 is set at $2,500. However, the market rent as indicated by Zillow's Rent Index (ZORI) stands at $3,015. This suggests that landlords can charge above the FMR, making the rent math favorable for those who can attract market-rate tenants.
The second point concerns the affordability of property acquisition. With a median home value of $883,499, the cost of entry into this market is relatively high. Nonetheless, the average days on market (DOM) of 41 days indicates a brisk pace of sales, which could be advantageous for quick turnover and capital appreciation. Additionally, the low price-cut share of 0.2% suggests that homes are selling close to their asking prices, further supporting the idea that acquisitions are reasonably priced relative to the market.
The third aspect to consider is tenant demand. The population of 39,338 in ZIP 96740 provides a substantial pool of potential renters. With 28.2% of the population renting, there is a considerable tenant base available for landlords to serve. This percentage translates to nearly 11,100 renters, a significant number that supports rental investments.
In conclusion, ZIP 96740 presents a viable opportunity for rental investments. Landlords can expect to charge above the FMR, indicating a positive rent differential. Property acquisition is costly but supported by strong market conditions, as evidenced by the quick sales and minimal need for price reductions. Furthermore, the presence of a large tenant pool ensures steady demand. These factors collectively suggest that Kailua Kona is a promising location for rental properties, offering both financial feasibility and market attractiveness.
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.