Location: Seattle-Bellevue, WA | Metro: Seattle-Bellevue, WA HUD Metro FMR Area
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 | $3,010 |
| 1 Bedroom | $3,140 |
| 2 Bedrooms | $3,670 |
| 3 Bedrooms | $4,790 |
| 4 Bedrooms | $5,690 |
| 5 Bedrooms | $6,600 |
| 6 Bedrooms | $7,392 |
| 7 Bedrooms | $7,983 |
| 8 Bedrooms | $8,382 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $3,140 | $538,800 | 0.58% | F |
| 2BR | $3,670 | $599,473 | 0.61% | D |
| 3BR | $4,790 | $924,470 | 0.52% | F |
| 4BR | $5,690 | $1,291,192 | 0.44% | F |
| 5BR | $6,600 | $1,494,996 | 0.44% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 98065, located in Snoqualmie, WA, reveals a significant disparity between government-subsidized rental income and market rents. For a two-bedroom property, the Fair Market Rent (FMR) for fiscal year 2024 is set at $3390 annually. In contrast, the Zillow Observed Rent Index (ZORI) indicates that the market rent for a similar unit is $2,676 per month.
To calculate the gross yield, we use the median home value of $1,117,694 as the basis. The annual Section 8 rent of $3390 translates into a gross yield of approximately 0.3%. This is calculated by dividing the annual rent by the median home value: $3390 / $1,117,694 = 0.003. On the other hand, if the property were rented at the market rate of $2,676 per month, the annual market rent would be $32,112, resulting in a gross yield of around 2.9%. This is derived by multiplying the monthly rent by 12 months and then dividing by the median home value: ($2,676 * 12) / $1,117,694 = 0.029.
The gross yield based on market rent is nearly ten times higher than the yield based on Section 8 rent. However, the decision to participate in the Section 8 program should also consider the local rental market conditions. With a renter density of 14.8%, it suggests that a majority of residents in ZIP 98065 prefer homeownership over renting. This could imply that finding tenants willing to pay the market rent might be easier than attracting Section 8 participants. Additionally, the N/A-day DOM (Days on Market) for rentals indicates incomplete data, which could mean that the rental market turnover is either very quick or very slow, making it challenging to predict the exact rental period.
In conclusion, while the Section 8 program offers a stable source of income, the gross yields are significantly lower compared to market rents. Given the relatively low renter density and the potential ease of finding market-rate tenants, participating in the Section 8 program may not be the most financially advantageous option for landlords and small-portfolio investors in ZIP 98065. The choice ultimately depends on the investor's risk tolerance and long-term goals.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.