Location: Pittsylvania County-Danville city, VA | Metro: Pittsylvania County-Danville city, VA HUD Nonmetro 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 | $660 |
| 1 Bedroom | $760 |
| 2 Bedrooms | $940 |
| 3 Bedrooms | $1,290 |
| 4 Bedrooms | $1,430 |
| 5 Bedrooms | $1,659 |
| 6 Bedrooms | $1,858 |
| 7 Bedrooms | $2,007 |
| 8 Bedrooms | $2,107 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $940 | $88,997 | 1.06% | B |
| 3BR | $1,290 | $193,187 | 0.67% | D |
| 4BR | $1,430 | $242,461 | 0.59% | F |
| 5BR | $1,659 | $337,867 | 0.49% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 24540 in Danville, VA, reveals some key insights into the potential returns for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a two-bedroom apartment in the area is set at $910 annually, based on the fiscal year 2026 metro rate. This translates to an implied gross yield of approximately 5.94% when compared to the median home value of $153,079. The calculation is straightforward: $910 divided by $153,079 equals 0.00594, or about 5.94%.
In contrast, the market rent for a two-bedroom property, as indicated by the Zillow Observed Rental Index (ZORI), stands at $1,171 per month. Annualizing this figure yields a total of $14,052. When this annual rental income is compared to the median home value, it suggests a significantly higher implied gross yield of around 9.18%. This calculation is derived by dividing $14,052 by $153,079, resulting in 0.0918, or roughly 9.18%.
The gross-yield comparison between the FMR and market rent highlights a substantial difference in potential returns. However, the reality of the situation must also consider the local rental market dynamics. With a renter density of 40.4%, it indicates that nearly half of the households in Danville are renters, creating a steady demand for rental properties. Yet, the lack of data regarding days on market (DOM) complicates the analysis, as this metric would provide insight into how quickly units can be leased, affecting vacancy rates and ultimately net operating income (NOI).
Given these factors, the market rent scenario appears more realistic for most investors seeking to maximize returns. The higher gross yield of 9.18% aligns better with the competitive nature of the rental market and the general preference for market-rate rentals among property owners aiming to optimize their investment performance. However, landlords should be aware that Section 8 properties come with additional administrative responsibilities and income stability, which might offset the lower gross yield for some investors.
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.