Location: Lewiston, ID | Metro: Lewiston, ID-WA MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,020 |
| 1 Bedroom | $1,020 |
| 2 Bedrooms | $1,340 |
| 3 Bedrooms | $1,860 |
| 4 Bedrooms | $2,200 |
| 5 Bedrooms | $2,552 |
| 6 Bedrooms | $2,858 |
| 7 Bedrooms | $3,087 |
| 8 Bedrooms | $3,241 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 99402 reveals a detailed picture of the potential Section 8 cap rates, crucial for landlords and small-portfolio investors looking to enter or adjust their investments in this area. The Fair Market Rent (FMR) for a two-bedroom apartment in ZIP 99402 for fiscal year 2024 is set at $1,130 annually. Meanwhile, the market rent based on Census ACS data stands at $1,157 per month.
To derive the gross yield, we first annualize the market rent: $1,157 multiplied by 12 months equals $13,884 annually. This figure represents the potential rental income from a two-bedroom property under market conditions. When compared to the median home value of $404,205, the implied gross yield is approximately 3.4%. This calculation is derived by dividing the annual rental income ($13,884) by the median home value ($404,205).
In contrast, the Section 8 FMR of $1,130 per month annualizes to $13,560. Using this annualized figure against the median home value of $404,205, the implied gross yield drops slightly to about 3.3%. This lower yield reflects the fixed nature of Section 8 rents, which are typically below market rates.
Given the 16.7% renter density in ZIP 99402, it's clear that the majority of homeowners are not renters. However, this statistic does not necessarily diminish the appeal of Section 8 properties. The lack of data on days on market (DOM) suggests that there might be a steady demand for rental units, especially those participating in the Section 8 program, indicating that vacancy risks could be lower than average.
While the gross yield is marginally higher for market rents at 3.4%, the stability and security offered by Section 8 rentals, despite the slightly lower 3.3% yield, can be highly attractive. Investors should consider the trade-off between slightly higher yields from market rents and the guaranteed, albeit lower, rental income from Section 8 contracts, alongside factors such as tenant turnover and maintenance costs.
Ultimately, the choice between market rents and Section 8 participation hinges on individual investment goals and risk tolerance. For those prioritizing long-term stability and reduced management overhead, Section 8 properties offer a reliable option with an acceptable gross yield. For investors willing to accept higher risk for potentially higher returns, pursuing market rents may be more appealing.
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.