Location: Gary, IN | Metro: Gary, IN 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 | $1,100 |
| 1 Bedroom | $1,160 |
| 2 Bedrooms | $1,410 |
| 3 Bedrooms | $1,720 |
| 4 Bedrooms | $1,870 |
| 5 Bedrooms | $2,169 |
| 6 Bedrooms | $2,429 |
| 7 Bedrooms | $2,623 |
| 8 Bedrooms | $2,754 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,410 | $142,948 | 0.99% | C |
| 3BR | $1,720 | $170,057 | 1.01% | B |
| 4BR | $1,870 | $193,538 | 0.97% | C |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 46327 (Hammond, IN) reveals a notable discrepancy between federally set Fair Market Rents (FMRs) and prevailing market rents, impacting potential investment yields.
The annualized Fair Market Rent for a two-bedroom unit, as determined by HUD for FY 2024, stands at $1210 per month. Given the median home value of $154,435, this translates into an implied gross yield of approximately 9.6%. The calculation is straightforward: $1210 monthly rent equates to $14,520 annually; dividing this by the median home value yields a 9.6% gross yield.
In contrast, the Census Bureau's American Community Survey indicates a market rent of $1,093 per month for similar units. This figure suggests a lower gross yield of about 9.0%, calculated as follows: $1,093 monthly rent amounts to $13,116 annually; when divided by the median home value, it results in a 9.0% gross yield.
The 9.6% gross yield based on the Section 8 FMR is higher than the market rent-based yield of 9.0%. However, the reality of investment in ZIP 46327 leans towards the latter scenario being more practical. With a renter density of 38.5%, landlords must consider the likelihood of finding tenants willing to pay the higher FMR rate. Additionally, the lack of data on days on market (DOM) suggests challenges in tenant turnover and leasing efficiency that could impact the overall viability of achieving the higher FMR-based yield.
Investors should focus on the market rent-based yield of 9.0% as a more realistic benchmark for potential returns in Hammond, IN. While the Section 8 program offers stability through government-backed payments, the actual performance of rental properties in this area is likely to be closer to the market rate due to the local economic conditions and tenant preferences.
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.