Location: Tuscola County, MI | Metro: Huron County, MI
| Unit Size | Monthly FMR |
|---|---|
| Studio | $900 |
| 1 Bedroom | $1,060 |
| 2 Bedrooms | $1,260 |
| 3 Bedrooms | $1,610 |
| 4 Bedrooms | $1,660 |
| 5 Bedrooms | $1,926 |
| 6 Bedrooms | $2,157 |
| 7 Bedrooms | $2,330 |
| 8 Bedrooms | $2,447 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 48759 reveals a distinct difference between the Federal Market Rent (FMR) and the actual market rent. The annualized FMR for a two-bedroom apartment in the area is set at $1,220 (for fiscal year 2026, based on metropolitan standards), while the Census ACS indicates an average market rent of $973.
To calculate the implied gross yield, we use the median home value of $140,823 as our investment base. For the FMR scenario, the annual rental income would be $14,640 ($1,220 multiplied by 12 months), leading to a gross yield of approximately 10.4%. In contrast, using the market rent figure of $973, the annual rental income would be $11,676, resulting in a gross yield of about 8.3%.
Given the 22.5% renter density in ZIP 48759, it's important to note that the actual market conditions might favor the lower gross yield derived from the market rent. The FMR represents the maximum amount that a landlord can charge under the Section 8 program, but the reality is that many tenants might not be able to afford rents at this level, especially considering the limited data on days on market (DOM) being marked as N/A. This suggests that the rental market could be slow-moving, further supporting the argument that the lower gross yield is more realistic.
In conclusion, while the FMR provides a higher gross yield of 10.4%, the market rent scenario, with its gross yield of 8.3%, is likely a more accurate reflection of what landlords and small-portfolio investors should expect in ZIP 48759. This analysis underscores the importance of understanding local rental dynamics and tenant affordability when assessing potential investments in the Section 8 housing market.
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.