Location: Hillsdale County, MI | Metro: Hillsdale 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 | $780 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,260 |
| 4 Bedrooms | $1,340 |
| 5 Bedrooms | $1,554 |
| 6 Bedrooms | $1,740 |
| 7 Bedrooms | $1,879 |
| 8 Bedrooms | $1,973 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,010 | $162,216 | 0.62% | D |
| 3BR | $1,260 | $221,868 | 0.57% | F |
| 4BR | $1,340 | $257,613 | 0.52% | F |
| 5BR | $1,554 | $291,946 | 0.53% | F |
U.S. Census Bureau data (2024)
The ZIP code 49242 is situated within the city of Hillsdale, Michigan, a community characterized by a moderate-sized population of 14,750 residents. With 26.8% of the population being renters, it indicates a blend of homeowners and tenants, suggesting a stable yet somewhat modest rental market. The median household income in this area stands at $61,029, which places it slightly above the national average, indicating a middle-class neighborhood where most residents can afford basic living expenses but may seek affordable housing options. The median home value of $198,945 reflects a relatively low-cost residential environment compared to larger metropolitan areas.
Moving into the specifics of rental economics, the Fair Market Rent (FMR) for ZIP 49242 as of fiscal year 2026 is set at $990. This figure represents the benchmark for rental costs under the Section 8 program, designed to ensure affordability for low-income families. However, the actual market rent, as measured by the Zillow Rent Index (ZORI), is higher at $1,200 per month. This discrepancy suggests that there is potential for landlords to earn slightly more than the subsidized rates, though it also implies that the rental market might be somewhat competitive, requiring a degree of property management expertise to attract tenants.
Considering these factors, ZIP 49242 would likely suit a hands-on value-add buyer more than a hands-off voucher operator. The difference between the FMR and market rent indicates an opportunity to improve properties and command rents closer to the market rate. A hands-on approach could leverage the existing demand for affordable housing while positioning properties to capture some of the premium in the local rental market. For those willing to invest time and resources into property enhancements, the potential for higher returns exists alongside the security of the Section 8 program. Conversely, a purely hands-off strategy might result in lower occupancy rates or difficulty in attracting tenants due to the competition from unsubsidized rentals.
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.