Section 8 Fair Market Rent (FMR) for ZIP 98124 - 2027

FY 2027 Fair Market Rent Rates

The ZIP code 98124 in Unknown, WA presents a scenario that can be analyzed through a decision tree for landlords considering Section 8 investments.

1) Does FMR $2700 (zip FY 2024) clear debt service on a property?

• Yes: If the Fair Market Rent (FMR) of $2700 per month is sufficient to cover the debt service of the property, then the investment could be viable. Debt service includes mortgage payments, property taxes, insurance, and maintenance costs. The landlord must calculate if these expenses are covered by the FMR.
• No: If the FMR does not cover the debt service, purchasing a property in this ZIP code for Section 8 tenants would result in financial losses. Landlords should seek properties where the FMR exceeds their debt obligations.
• It Depends: This scenario arises when the FMR closely matches the debt service. Landlords must carefully assess the potential for additional income sources or cost savings to ensure profitability.

2) Is market rent above, at, or below FMR?

• Above FMR: If the market rent exceeds the FMR, landlords can consider renting to non-Section 8 tenants to maximize profits. However, this may limit the pool of potential renters who can afford the higher rates.
• At FMR: When market rents align with the FMR, landlords can effectively utilize Section 8 vouchers without leaving money on the table. This balance allows for stable rental income aligned with government guidelines.
• Below FMR: If market rents are below the FMR, landlords might find opportunities to attract Section 8 tenants at slightly above-market rates, though this could still be lower than the FMR.

3) Are the percentage of renters and the days on market enough to ensure demand?

• Yes: A high percentage of renters combined with low days on market (DOM) indicates strong demand for rental properties in this area. This supports the likelihood of finding tenants quickly and maintaining occupancy rates.
• No: If the percentage of renters is low and DOM is high, there may not be enough demand to justify an investment. This suggests difficulty in filling vacancies and retaining tenants.
• It Depends: Moderate percentages of renters and DOM suggest a balanced market, but landlords must also consider the competition and local economic factors to gauge true demand.

Ultimately, the decision to invest in ZIP 98124 hinges on these three key factors. Landlords must evaluate whether the FMR covers their costs, aligns with market rents, and if there is sufficient demand for rental properties.

Data Sources: FMR data from HUD (2027).

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.