Location: Urban Honolulu, HI | Metro: Urban Honolulu, HI MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,980 |
| 1 Bedroom | $2,100 |
| 2 Bedrooms | $2,740 |
| 3 Bedrooms | $3,790 |
| 4 Bedrooms | $4,580 |
| 5 Bedrooms | $5,313 |
| 6 Bedrooms | $5,951 |
| 7 Bedrooms | $6,427 |
| 8 Bedrooms | $6,748 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 96791, Waialua, HI, reveals some interesting dynamics when comparing Federal Market Rent (FMR) and market rent. For a two-bedroom unit, the annualized FMR for FY 2024 is $2660, while the Zillow Observed Rent Index (ZORI) indicates a market rent of $2,973 per month.
To calculate the gross yield for both scenarios, we first need to annualize these monthly rents. The annualized FMR for a two-bedroom unit is $31,920 ($2660 * 12), and the annualized market rent is $35,676 ($2,973 * 12).
Given the median home value in the area is $1,021,126, the implied gross yield for the FMR scenario is approximately 3.12%, calculated as follows: $31,920 / $1,021,126 = 0.0312 or 3.12%. For the market rent scenario, the gross yield is slightly higher at about 3.49%, calculated as: $35,676 / $1,021,126 = 0.0349 or 3.49%.
Considering the 35.2% renter density in Waialua, it's important to note that the day-on-market (DOM) statistic is listed as N/A, which suggests either limited data or a highly specialized rental market. This lack of DOM data means we cannot directly assess how quickly properties typically rent out, but the high renter density implies a steady demand for rental units.
Between the two gross yields, the market rent scenario provides a more optimistic outlook at 3.49%, compared to the FMR scenario at 3.12%. However, the reality of Section 8 participation often involves lower rents due to the fixed payment standards set by the government. Therefore, the FMR-based gross yield of 3.12% is likely a more accurate representation of what landlords can expect if they participate in the Section 8 program.
It's crucial for investors to understand that while the market rent scenario offers a higher gross yield, the actual income might be closer to the FMR figure due to the nature of the Section 8 program. Landlords should also consider the stability of tenants and the administrative aspects of managing Section 8 properties.
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.