Location: Lawrence County, IN | Metro: Bloomington, 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 | $790 |
| 1 Bedroom | $800 |
| 2 Bedrooms | $1,050 |
| 3 Bedrooms | $1,250 |
| 4 Bedrooms | $1,610 |
| 5 Bedrooms | $1,868 |
| 6 Bedrooms | $2,092 |
| 7 Bedrooms | $2,259 |
| 8 Bedrooms | $2,372 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $800 | $105,526 | 0.76% | D |
| 2BR | $1,050 | $150,779 | 0.7% | D |
| 3BR | $1,250 | $223,046 | 0.56% | F |
| 4BR | $1,610 | $296,957 | 0.54% | F |
| 5BR | $1,868 | $349,092 | 0.54% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 47421 (Bedford, IN) reveals an interesting picture when comparing the Federal Market Rent (FMR) and the Zillow Observed Rental Index (ZORI).
Based on the Fair Market Rent for a two-bedroom apartment in fiscal year 2024, the annualized figure stands at $1020. This translates into an implied gross yield of approximately 0.49%. The calculation is straightforward: divide the annual rent by the median home value, which is $209,226 for Bedford, IN.
On the other hand, using the ZORI, the market rent for a similar two-bedroom unit is $1,025 per month. This yields an implied gross yield of about 0.50% when annualized against the median home value. The difference between the two yields is marginal, with the ZORI providing a slightly higher yield.
Given the 20.0% renter density in ZIP 47421, it's important to consider the likelihood of securing a tenant under either the FMR or ZORI rates. While the FMR provides a guaranteed baseline, the ZORI reflects the actual rental market conditions. However, the N/A-day Days on Market (DOM) indicates that there is insufficient data to determine how quickly units are typically rented in this area, which adds a layer of uncertainty.
In conclusion, while the FMR offers a conservative estimate with a gross yield of 0.49%, the ZORI suggests a slightly more optimistic scenario with a 0.50% gross yield. For investors looking to align their expectations with current market realities, the ZORI-based yield might be more appropriate. However, the decision should also factor in the stability and predictability offered by the Section 8 program, especially considering the limited data on rental turnover rates in the area.
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.