Location: Tuscola County, MI | Metro: Tuscola County, MI
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 | $710 |
| 1 Bedroom | $840 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,350 |
| 4 Bedrooms | $1,540 |
| 5 Bedrooms | $1,786 |
| 6 Bedrooms | $2,000 |
| 7 Bedrooms | $2,160 |
| 8 Bedrooms | $2,268 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,010 | $137,499 | 0.73% | D |
| 3BR | $1,350 | $203,108 | 0.66% | D |
| 4BR | $1,540 | $220,604 | 0.7% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 48723 (Caro, MI) reveals a nuanced picture when comparing the Federal Market Rent (FMR) to the market rent. Using the annualized 2BR FMR of $970 for fiscal year 2026, the gross yield for a property valued at $179,192 would be approximately 5.4%. This calculation is derived from multiplying the monthly FMR by 12 months ($970 x 12 = $11,640), and then dividing that annual income by the median home value ($11,640 / $179,192 = 0.065, or 5.4%).
In contrast, using the market rent figure of $750, the gross yield drops significantly to about 4.1%. This is calculated by multiplying the market rent by 12 months ($750 x 12 = $9,000), and then dividing by the median home value ($9,000 / $179,192 = 0.050, or 4.1%).
The 19.6% renter density suggests that while there is a substantial portion of renters, the majority of households in Caro, MI, still prefer homeownership. This implies that relying solely on market rent might underestimate the potential income for properties participating in the Section 8 program, which tends to have more stable occupancy rates.
However, the lack of Days on Market (DOM) data makes it challenging to predict how quickly a property could be rented under the Section 8 program. Typically, a lower DOM indicates higher demand, which could support the higher FMR-based gross yield. Without specific DOM data, it's prudent to consider the FMR scenario as more optimistic, yet potentially achievable due to the program's structure and demand for affordable housing.
In summary, the gross yield based on the FMR is 5.4%, while the market rent yields a gross return of 4.1%. Given the renter density and the nature of the Section 8 program, the FMR-based yield is more likely to reflect the actual income potential for landlords willing to participate in the program. However, investors should conduct their own detailed analysis, considering factors such as property management costs and vacancy rates, to determine the net operating income (NOI) and thus the true cap rate.
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.