Location: Tacoma, WA | Metro: Tacoma, WA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,370 |
| 1 Bedroom | $1,550 |
| 2 Bedrooms | $1,900 |
| 3 Bedrooms | $2,620 |
| 4 Bedrooms | $2,960 |
| 5 Bedrooms | $3,434 |
| 6 Bedrooms | $3,846 |
| 7 Bedrooms | $4,154 |
| 8 Bedrooms | $4,362 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 98418 in Tacoma, WA, reveals some interesting insights. To begin, we annualize the Fair Market Rent (FMR) for a two-bedroom apartment at $1910 per month, which translates to an annual income of $22,920. Using the median home value of $416,585, the implied gross yield for a property rented under the Section 8 program would be approximately 5.5%. This is calculated by dividing the annual rental income by the median home value.
Next, we consider the market rent, which stands at $1,890 per month according to ZORI (Zillow Observed Rental Index). This equates to an annual rental income of $22,680. The implied gross yield for renting at market rates would thus be around 5.4%, again derived by dividing the annual rental income by the median home value.
Given the renter density of 36.2% in the area, it's important to note that the lower day-on-market (DOM) figure suggests a strong demand for rental properties. However, the exact DOM figure is not available, which could impact the analysis. Despite this, the slightly higher gross yield under the Section 8 program compared to market rates makes it a more attractive option for landlords and small-portfolio investors.
In conclusion, while the difference between the two yields is minimal, the stability and guaranteed income provided by the Section 8 program make it a more realistic choice for long-term investment in ZIP 98418. The program ensures a steady stream of tenants and rent payments, unlike the volatile nature of market rents. Therefore, the 5.5% gross yield under Section 8 is preferable over the 5.4% yield from market rates.
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.