Location: Kenai Peninsula Borough, AK | Metro: Kenai Peninsula Borough, AK
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,240 |
| 1 Bedroom | $1,280 |
| 2 Bedrooms | $1,670 |
| 3 Bedrooms | $2,310 |
| 4 Bedrooms | $2,800 |
| 5 Bedrooms | $3,248 |
| 6 Bedrooms | $3,638 |
| 7 Bedrooms | $3,929 |
| 8 Bedrooms | $4,125 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 99605 reveals key insights into the potential for Section 8 investments in this area. With the annualized Fair Market Rent (FMR) for a 2-bedroom apartment set at $1,530 for fiscal year 2026, we can derive an implied gross yield based on the median home value of $237,932.
To calculate the gross yield, we first need to determine the effective rental income per property. Assuming a 2-bedroom apartment represents a typical unit in a single-family home, the annual rental income would be $18,360 ($1,530 x 12 months). Given the median home value of $237,932, the implied gross yield for a Section 8 investment would be approximately 7.72%. This is calculated by dividing the annual rental income by the median home value.
In contrast, the lack of available market rent data for ZIP 99605 makes it challenging to compare directly. However, if we were to consider a scenario where market rents exceed the FMR, the gross yield would naturally increase, potentially offering higher returns than the Section 8 scenario. For instance, if market rents were hypothetically $2,000 per month, the gross yield would be around 10.27%, which is significantly higher than the Section 8 yield.
The 39.1% renter density in ZIP 99605 suggests a moderate demand for rental properties, which could support both Section 8 and market-rate investments. However, the absence of data regarding days on the market (DOM) complicates the assessment of how quickly properties might be leased under either scenario. In general, shorter DOM periods indicate higher demand and faster leasing times, which could be more favorable for market-rate investments.
Given the current data, the Section 8 scenario offers a stable but lower gross yield compared to a hypothetical market-rate scenario. The implied gross yield of 7.72% provides a clear benchmark for investors considering Section 8 participation. While the market-rate scenario could offer a gross yield of about 10.27%, the uncertainty around actual market rents means that the Section 8 option presents a more predictable income stream.
Investors should weigh the benefits of guaranteed rental income from Section 8 against the potential for higher yields from market-rate rentals. The decision should also consider the local rental market dynamics and the stability offered by government-subsidized tenants.
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.