Location: Lansing-East Lansing, MI | Metro: Battle Creek, 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 | $910 |
| 1 Bedroom | $1,090 |
| 2 Bedrooms | $1,300 |
| 3 Bedrooms | $1,550 |
| 4 Bedrooms | $1,740 |
| 5 Bedrooms | $2,018 |
| 6 Bedrooms | $2,260 |
| 7 Bedrooms | $2,441 |
| 8 Bedrooms | $2,563 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,300 | $128,723 | 1.01% | B |
| 3BR | $1,550 | $236,994 | 0.65% | D |
| 4BR | $1,740 | $295,534 | 0.59% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 49014 in Battle Creek, MI, reveals a nuanced picture when comparing the Federal Market Rent (FMR) and the actual market rent. For a two-bedroom unit, the annualized FMR for FY 2024 is $1130, while the Zillow Observed Rent Index (ZORI) indicates a market rent of $1185.
Using these figures against the median home value of $197,613, we can calculate the implied gross yields. For the FMR scenario, the annual rental income would be $13,560 ($1130 x 12 months), leading to a gross yield of approximately 6.87%. In contrast, using the market rent figure of $1185, the annual rental income would be $14,220, resulting in a gross yield of about 7.20%.
The higher gross yield based on market rent suggests that investors could potentially achieve better returns by renting at the local market rate rather than the FMR. However, considering the renter density of 27.0%, it's important to note that the demand for rental properties might not be as high as in areas with greater population mobility. This factor should influence the decision on whether to aim for the higher market rent or the FMR, which is more stable but offers a lower gross yield.
The N/A-day DOM (days on market) indicates that there isn't enough recent data to determine how quickly units are being rented, which could affect the vacancy rates and thus the overall profitability. Given the slightly higher gross yield with market rent and the moderate renter density, it seems more realistic for investors to target the market rent figure of $1185. This approach balances the potential for higher returns with the need to ensure steady occupancy rates.
In summary, the gross yield derived from the FMR is 6.87%, whereas the market rent implies a gross yield of 7.20%. The latter provides a more optimistic outlook for investors looking to maximize their returns in ZIP 49014, assuming they can maintain consistent tenancy despite the lower renter density.
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.