Location: Lafayette-West Lafayette, IN | Metro: Lafayette-West Lafayette, 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 | $840 |
| 1 Bedroom | $950 |
| 2 Bedrooms | $1,130 |
| 3 Bedrooms | $1,350 |
| 4 Bedrooms | $1,890 |
| 5 Bedrooms | $2,192 |
| 6 Bedrooms | $2,455 |
| 7 Bedrooms | $2,651 |
| 8 Bedrooms | $2,784 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,350 | $257,686 | 0.52% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 47941 reveals an interesting scenario when comparing the Federal Market Rent (FMR) and the market rent figures. For a two-bedroom property, the annualized FMR is $11,880 ($990 per month), while the annualized market rent is $11,364 ($947 per month).
Given the median home value in ZIP 47941 is $246,336, we can calculate the implied gross yield for both scenarios. When using the FMR, the gross yield is approximately 4.8%. This is derived from the annual rent divided by the median home value: $11,880 / $246,336 = 0.0482 or 4.8%. On the other hand, if we consider the market rent, the gross yield drops to about 4.6%, calculated as $11,364 / $246,336 = 0.0461 or 4.6%.
The difference between these two yields, 4.8% vs. 4.6%, might seem marginal at first glance, but it has significant implications for investment decisions. The higher yield based on FMR suggests that properties receiving Section 8 subsidies could generate slightly better returns compared to those rented at market rates. However, the reality is often influenced by additional factors such as maintenance costs, vacancy rates, and the overall condition of the housing market.
In ZIP 47941, where only 18.7% of residents are renters, the market dynamics lean towards favoring owner-occupied homes. This low renter density indicates that landlords and small-portfolio investors should be cautious about relying solely on the higher FMR-based gross yield. While it's a positive indicator, the actual performance might be closer to the market rent yield due to the limited pool of potential tenants.
The N/A-day DOM (Days on Market) statistic implies that there isn't enough recent data to provide a clear picture of how long rental properties typically stay on the market before being leased. This lack of information makes it challenging to predict vacancy rates accurately, which could affect the overall yield.
In conclusion, while the FMR-based gross yield of 4.8% is more favorable, the market rent yield of 4.6% is likely to be more representative of what landlords and small-portfolio investors can realistically expect in ZIP 47941. The decision to invest should consider the local rental market conditions and the specific challenges associated with the area's low renter density.
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.