Location: Grayson County, VA | Metro: Alleghany County, NC
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 | $820 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $1,080 |
| 3 Bedrooms | $1,290 |
| 4 Bedrooms | $1,630 |
| 5 Bedrooms | $1,891 |
| 6 Bedrooms | $2,118 |
| 7 Bedrooms | $2,287 |
| 8 Bedrooms | $2,401 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,080 | $237,469 | 0.45% | F |
| 3BR | $1,290 | $263,959 | 0.49% | F |
| 4BR | $1,630 | $343,111 | 0.48% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 28675, Sparta, NC, reveals interesting insights into the potential investment returns. To begin with, let's consider the Fair Market Rent (FMR) for a two-bedroom apartment, which stands at an annualized rate of $12,120 ($1,010 per month). Using the median home value of $248,341, the implied gross yield for a property receiving Section 8 payments would be approximately 4.9%. This calculation is derived by dividing the annual rental income by the property value.
On the other hand, if we use the market rent figure of $663 per month for a two-bedroom apartment, the annualized rental income drops to $7,956. The implied gross yield under this scenario is significantly lower, coming in at about 3.2%. This yield is calculated similarly, by taking the annual market rent and dividing it by the median home value.
Given the renter density of 27.6%, it is clear that a significant portion of the population in Sparta, NC, may rely on rental assistance programs such as Section 8. However, the lack of data on the days-on-market (DOM) makes it difficult to gauge how quickly properties can be leased, especially under Section 8. Despite this limitation, the higher implied gross yield of 4.9% based on FMR suggests a more favorable investment scenario compared to the market rent yield of 3.2%.
The disparity between these yields highlights the importance of considering the specific characteristics of the local housing market when evaluating investment opportunities. While the market rent yield is lower, it represents a more realistic scenario for those who might not secure Section 8 tenants. For investors looking to maximize their returns, targeting properties that qualify for Section 8 assistance could be a prudent strategy, given the higher FMR-based yield.
Ultimately, the decision should be informed by the investor's goals and risk tolerance. For those willing to navigate the complexities of the Section 8 program, the potential for a higher gross yield is present. However, for those seeking a more straightforward approach, relying on market rents may be more practical, despite the lower yield.
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.