Location: Roanoke, VA | Metro: Roanoke, VA HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,380 |
| 1 Bedroom | $1,450 |
| 2 Bedrooms | $1,700 |
| 3 Bedrooms | $2,350 |
| 4 Bedrooms | $2,840 |
| 5 Bedrooms | $3,294 |
| 6 Bedrooms | $3,689 |
| 7 Bedrooms | $3,984 |
| 8 Bedrooms | $4,183 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,450 | $148,279 | 0.98% | C |
| 2BR | $1,700 | $239,186 | 0.71% | D |
| 3BR | $2,350 | $335,519 | 0.7% | D |
| 4BR | $2,840 | $439,734 | 0.65% | D |
| 5BR | $3,294 | $624,577 | 0.53% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 24018 in Roanoke, VA, reveals key insights into potential investment returns. Using the Fair Market Rent (FMR) for a 2-bedroom unit at $1240 per month (annualized to $14,880), and the Zillow Observed Rent Index (ZORI) at $1,603 (annualized to $19,236), we can derive the gross yields against the median home value of $376,376.
First, consider the FMR scenario. The annualized rent of $14,880 implies a gross yield of approximately 3.95%. This calculation is derived from dividing the annual rent by the median home value: $14,880 / $376,376 = 0.0395 or 3.95%. For the ZORI scenario, the annualized rent of $19,236 translates to a gross yield of about 5.11%. This figure comes from $19,236 / $376,376 = 0.0511 or 5.11%.
Evaluating these yields in the context of Roanoke's rental market, the FMR-based yield of 3.95% appears more realistic. With a 26.7% renter density, there is a significant portion of the population that might be seeking affordable housing options, making the Section 8 program an attractive choice for tenants. Additionally, the 33-day Days on Market (DOM) indicates that properties are quickly rented out, suggesting a competitive rental market where Section 8 rents may be closer to the FMR rather than the higher ZORI.
Landlords and small-portfolio investors should focus on the lower gross yield as a more accurate reflection of potential returns when considering Section 8 participation. While the higher yield from the ZORI is tempting, it does not align with the typical behavior of tenants enrolled in the Section 8 program, who generally pay the subsidized rate set by FMR. Thus, the 3.95% gross yield should be used as the baseline for financial projections in ZIP 24018.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.