Location: Ann Arbor, MI | Metro: Ann Arbor, MI MSA
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 | $1,710 |
| 1 Bedroom | $1,770 |
| 2 Bedrooms | $2,120 |
| 3 Bedrooms | $2,540 |
| 4 Bedrooms | $2,790 |
| 5 Bedrooms | $3,236 |
| 6 Bedrooms | $3,624 |
| 7 Bedrooms | $3,914 |
| 8 Bedrooms | $4,110 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,120 | $372,545 | 0.57% | F |
| 3BR | $2,540 | $461,910 | 0.55% | F |
| 4BR | $2,790 | $594,894 | 0.47% | F |
| 5BR | $3,236 | $735,250 | 0.44% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 48130 (Dexter, MI) provides insight into the potential returns for landlords and small-portfolio investors considering participation in the program. The Fair Market Rent (FMR) for a 2-bedroom apartment in Dexter for FY 2024 is set at $1510 per month, while the market rent, based on Census ACS data, stands at $1,783 per month. To derive the gross yield for both scenarios, we must first annualize these figures.
The annualized FMR for a 2BR property is $18,120 ($1510 x 12 months), and the annualized market rent is $21,396 ($1,783 x 12 months). Given the median home value in Dexter is $501,296, the implied gross yield for the FMR scenario is 3.61%, calculated by dividing the annualized FMR by the median home value. For the market rent scenario, the implied gross yield increases to 4.27%.
The difference between these yields highlights the financial implications of choosing either the Section 8 route or the private rental market. However, the decision should also consider the local rental market dynamics, particularly the 11.9% renter density in Dexter. This relatively low percentage suggests that the majority of residents prefer homeownership, potentially limiting the pool of tenants interested in Section 8 properties.
Furthermore, the N/A-day Days on Market (DOM) indicates an incomplete dataset, possibly due to limited sales activity or a lack of comparable sales within the timeframe. This absence of data complicates a precise cap-rate calculation, but it does not negate the usefulness of the gross-yield comparison.
In conclusion, while the market rent scenario offers a higher gross yield of 4.27% compared to the Section 8 FMR's 3.61%, the decision should be informed by the local context. The lower renter density in Dexter might favor investments that cater to homeowners rather than renters, making the market rent scenario more realistic for most investors. Nonetheless, the stability and government backing of Section 8 rents could still appeal to some investors seeking guaranteed income over potentially higher yields.
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.