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 | $1,200 |
| 1 Bedroom | $1,270 |
| 2 Bedrooms | $1,540 |
| 3 Bedrooms | $1,870 |
| 4 Bedrooms | $2,050 |
| 5 Bedrooms | $2,378 |
| 6 Bedrooms | $2,663 |
| 7 Bedrooms | $2,876 |
| 8 Bedrooms | $3,020 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,540 | $245,523 | 0.63% | D |
| 3BR | $1,870 | $330,713 | 0.57% | F |
| 4BR | $2,050 | $398,951 | 0.51% | F |
| 5BR | $2,378 | $456,600 | 0.52% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 46356, located in Lowell, Indiana, is centered around the discrepancy between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR stands at $1,480, while the Census ACS reports the market rent at $1,179. This creates a gap of $301, or approximately 25.5%, where landlords can receive higher rents through Section 8 vouchers compared to the open-market rate.
In this context, the FMR being higher than the market rent makes ZIP 46356 an attractive yield play for landlords and small-portfolio investors. The average renter in Lowell, IN, constitutes only 11.5% of the population, indicating that the majority of residents own their homes. With a median home value of $330,861 and a median income of $89,217, it's evident that many homeowners might find it financially challenging to rent out their properties at market rates. However, Section 8 vouchers provide a consistent and reliable source of rental income, bridging the gap between the FMR and the market rent.
The benefits of accepting Section 8 tenants extend beyond just the financial aspect. Given the lower percentage of renters, landlords who participate in the program can expect a steady stream of tenants, reducing vacancy rates and the associated costs. Moreover, the higher rent subsidy ensures that landlords receive a payment closer to the FMR, which can help offset any maintenance or management expenses.
However, it's important to note that while the gap between FMR and market rent presents an opportunity for increased yields, there are also potential downsides to consider. The administrative burden of working with the government program, including the need to comply with HUD regulations, can add complexity to property management. Additionally, the fixed nature of the subsidy means landlords must be prepared to maintain their properties at a certain standard without the flexibility to adjust rents based on market conditions.
To summarize, the Section 8 program in ZIP 46356 offers a compelling investment strategy for landlords, given the substantial gap between the FMR and the actual market rent. This gap, coupled with the relatively low number of renters and high median home values, positions voucher tenants as a key component for achieving higher rental yields in this area.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.