Location: Mason County, MI | Metro: Manistee 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 | $750 |
| 1 Bedroom | $810 |
| 2 Bedrooms | $1,050 |
| 3 Bedrooms | $1,340 |
| 4 Bedrooms | $1,380 |
| 5 Bedrooms | $1,601 |
| 6 Bedrooms | $1,793 |
| 7 Bedrooms | $1,936 |
| 8 Bedrooms | $2,033 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,050 | $259,351 | 0.4% | F |
| 3BR | $1,340 | $274,006 | 0.49% | F |
| 4BR | $1,380 | $317,684 | 0.43% | F |
| 5BR | $1,601 | $389,391 | 0.41% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 49660, located in Manistee, MI, reveals a notable disparity between the federally mandated Fair Market Rent (FMR) and the actual market rent. For a two-bedroom unit, the annualized FMR for fiscal year 2026 is set at $1,040 per month, while the Census ACS indicates a market rent of $799 per month.
To calculate the gross yield, we divide the annual rent by the median home value of $259,956. Using the FMR, the annual rent comes to $12,480, resulting in a gross yield of approximately 4.8%. In contrast, using the market rent, the annual rent totals $9,588, leading to a gross yield of roughly 3.7%.
The higher gross yield based on FMR might appear attractive at first glance; however, it's important to consider the practical realities of the rental market in Manistee. With a renter density of only 17.5%, there is limited demand for rental properties, including those under the Section 8 program. This suggests that landlords might find it challenging to consistently lease units at the FMR rate, especially when the local market rent is significantly lower.
The absence of Days on Market (DOM) data further complicates the scenario, indicating potential issues with property turnover or a lack of comprehensive data. Given these factors, the gross yield based on the actual market rent of $799 per month is likely more reflective of the true rental environment in Manistee. Landlords should prepare for the possibility of operating below the FMR rate, which would reduce their overall income and affect the cap rate calculation.
In summary, while the FMR offers a gross yield of about 4.8%, the market conditions suggest a more realistic gross yield of around 3.7%. Investors must weigh these figures carefully, considering the low renter density and the potential difficulty in maintaining occupancy at the higher FMR rate.
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.