Location: Rockbridge County-Buena Vista city-Lexington city, VA | Metro: Rockbridge County-Buena Vista city-Lexington 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 | $980 |
| 1 Bedroom | $1,050 |
| 2 Bedrooms | $1,180 |
| 3 Bedrooms | $1,630 |
| 4 Bedrooms | $1,970 |
| 5 Bedrooms | $2,285 |
| 6 Bedrooms | $2,559 |
| 7 Bedrooms | $2,764 |
| 8 Bedrooms | $2,902 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,180 | $251,712 | 0.47% | F |
| 3BR | $1,630 | $348,400 | 0.47% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 24578, Natural Bridge, VA, reveals interesting insights into potential investment opportunities. For a two-bedroom property, the Fair Market Rent (FMR) as determined by HUD for FY 2026 is set at $1,060 per month in the metro area. Using this figure, the annualized rental income would be $12,720. Against the median home value of $326,261, this translates to an implied gross yield of approximately 3.9%. The formula for calculating this is simple: divide the annual rental income by the property value.
However, the Census ACS reports a market rent of $789 per month for similar properties. Annualizing this figure yields an annual rental income of $9,468. This results in a significantly lower implied gross yield of about 2.9% when compared to the median home value. The calculation here also follows the same principle: annual rental income divided by the median home value.
The gross yield comparison clearly shows that the Section 8 scenario offers a higher return on investment, at 3.9%, compared to the general market's 2.9%. However, the reality of the situation must be considered. With only 18.5% of residents being renters, the demand for rental properties, including those under the Section 8 program, is relatively low. This suggests that while the FMR provides a higher rental income, securing a tenant might prove challenging due to the limited number of renters in the area.
The N/A-day DOM (days on market) indicates that there is no available data on how long it takes for properties to be rented out. This lack of information makes it difficult to assess the liquidity risk associated with rental properties in this area. Given the low renter density, it is reasonable to assume that finding a Section 8 tenant could take longer than expected, thus affecting the overall return on investment.
In conclusion, while the Section 8 program offers a higher gross yield, the actual performance may be constrained by the low renter population and potential difficulties in tenant acquisition. Investors should carefully consider these factors before making decisions based solely on the higher FMR. The market rent scenario, though offering a lower gross yield, might present a more stable and predictable investment environment given the local conditions.
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.