Location: South Bend-Mishawaka, IN | Metro: South Bend-Mishawaka, IN HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $960 |
| 1 Bedroom | $1,170 |
| 2 Bedrooms | $1,370 |
| 3 Bedrooms | $1,670 |
| 4 Bedrooms | $1,820 |
| 5 Bedrooms | $2,111 |
| 6 Bedrooms | $2,364 |
| 7 Bedrooms | $2,553 |
| 8 Bedrooms | $2,681 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 46556 reveals a challenging investment scenario due to limited data availability. The Fair Market Rent (FMR) for a 2-bedroom apartment in FY 2024 is set at $1160 per month, while the Census ACS reports the market rent at $1211 per month.
To derive the implied gross yield, we first annualize these figures. The annualized FMR for a 2BR unit is $13,920 ($1160 x 12), and the annualized market rent is $14,532 ($1211 x 12).
Given the median home value is not available, we must rely on other metrics to infer the gross yield. With a high renter density of 96.5%, it's clear that the area predominantly supports rental housing over homeownership. However, without the median home value, we cannot calculate the exact cap rate. Instead, we can compare the two rent scenarios.
In the case of Section 8 rents, the gross yield would be based on the lower annualized income of $13,920. This represents a significant discount compared to the market rent of $14,532 annually. The difference between the two yields is approximately $612 per year, which is a reduction of about 4.2% when compared to the market rent scenario.
The implied gross yield from Section 8 rents is less favorable than the market rent yield, but it still provides a stable income source due to the government-backed nature of Section 8. The lack of Days on Market (DOM) data suggests that units are likely to remain occupied, supporting the reliability of the lower FMR yield.
Considering the high renter density and the stability provided by Section 8, the FMR yield is more realistic for long-term investment planning. Landlords and small-portfolio investors should weigh the guaranteed occupancy and steady income against the lower gross yield when deciding whether to participate in the Section 8 program.
Data Sources: FMR data from HUD (2027). 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.