Location: Klickitat County, WA | Metro: Klickitat County, WA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $840 |
| 1 Bedroom | $920 |
| 2 Bedrooms | $1,210 |
| 3 Bedrooms | $1,580 |
| 4 Bedrooms | $1,650 |
| 5 Bedrooms | $1,914 |
| 6 Bedrooms | $2,144 |
| 7 Bedrooms | $2,316 |
| 8 Bedrooms | $2,432 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 98619 provides a clear picture of potential investment returns under different rental scenarios. To begin, let's calculate the implied gross yield based on the Fair Market Rent (FMR) and the market rent figures.
Using the annualized 2BR FMR of $1,180, the annual rent income would be $14,160. Dividing this by the median home value of $382,140 gives an implied gross yield of approximately 3.7%. This calculation assumes that the property can be rented at the FMR rate, which is the maximum amount that Section 8 vouchers will cover.
In contrast, using the market rent figure of $779, the annual rent income would be $9,348. When divided by the median home value, this yields an implied gross yield of about 2.4%. This scenario reflects the actual rental rates that might be achieved in the local market, without relying on the higher FMR rate.
Given the 25.4% renter density in ZIP 98619, it is important to note that the availability of Section 8 vouchers may not fully match the number of potential renters. However, the lack of data on the average days on market (DOM) suggests that the rental market is stable, with properties likely being occupied relatively quickly once they become available.
The gross yield comparison between the two scenarios is significant. At 3.7%, the FMR-based yield offers a higher return on investment compared to the market rent-based yield of 2.4%. However, achieving the higher FMR rate requires that the property meets all Section 8 requirements and that there is sufficient demand for subsidized housing in the area.
Landlords and small-portfolio investors should consider the 2.4% gross yield as a more realistic baseline for their calculations, given the market conditions and the need to balance rental rates with the likelihood of finding tenants. While the 3.7% yield is attractive, it hinges on the assumption that the property can be rented at the FMR rate, which may not always be feasible due to the limited pool of Section 8 voucher holders relative to the total number of renters.
In conclusion, while the FMR-based gross yield of 3.7% represents an upper limit for potential returns, the market rent-based gross yield of 2.4% is a more practical starting point for investment analysis in ZIP 98619. Investors should adjust these figures according to their specific property conditions and market expectations.
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.