Location: Otsego County, MI | Metro: Kalkaska County, MI HUD Metro FMR Area
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 | $800 |
| 1 Bedroom | $900 |
| 2 Bedrooms | $1,140 |
| 3 Bedrooms | $1,360 |
| 4 Bedrooms | $1,600 |
| 5 Bedrooms | $1,856 |
| 6 Bedrooms | $2,079 |
| 7 Bedrooms | $2,245 |
| 8 Bedrooms | $2,357 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,140 | $165,094 | 0.69% | D |
| 3BR | $1,360 | $219,051 | 0.62% | D |
| 4BR | $1,600 | $283,501 | 0.56% | F |
U.S. Census Bureau data (2024)
The ZIP code 49738, located in Grayling, MI, presents an interesting balance between yield and stability for real estate investments, particularly for those interested in Section 8 properties.
On the yield axis, the Federal Market Rent (FMR) for the metro area in fiscal year 2026 is set at $1,070. This is notably higher than the market rent of $870, indicating a potential upside for landlords who can secure Section 8 tenants. The median home value in this area stands at $177,141, which suggests that there is a reasonable gap between rental income and property values, enhancing the potential for profit.
Moving to the stability axis, we see that approximately 24.3% of the population are renters, which provides a baseline for the demand for rental housing. However, the lack of data on the average days on market (DOM) indicates uncertainty about how quickly units might be filled or how stable tenancy is likely to be. The median household income is listed at $59,708, which is relatively low compared to national averages, potentially affecting the ability of residents to afford market rents without assistance programs such as Section 8.
Based on these figures, ZIP 49738 appears to be a market with moderate yield potential due to the higher FMR compared to market rent, but it also has low stability due to limited data on tenant turnover and lower median income levels. This suggests a scenario where landlords can expect decent cash flow if they can attract Section 8 tenants, but there will be challenges in maintaining consistent occupancy rates and dealing with the administrative aspects of the program.
To summarize, 49738 is best classified as a steady-cashflow zone with moderate yield and low stability. Landlords should focus on securing Section 8 contracts to maximize their returns while being prepared for the operational and financial risks associated with lower income areas.
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.