Location: Des Moines-West Des Moines, IA | Metro: Des Moines-West Des Moines, IA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,360 |
| 1 Bedroom | $1,410 |
| 2 Bedrooms | $1,680 |
| 3 Bedrooms | $2,290 |
| 4 Bedrooms | $2,350 |
| 5 Bedrooms | $2,726 |
| 6 Bedrooms | $3,053 |
| 7 Bedrooms | $3,297 |
| 8 Bedrooms | $3,462 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 50001 reveals a distinct picture regarding the potential returns for landlords and small-portfolio investors interested in Section 8 properties. Based on the Fair Market Rent (FMR) for a two-bedroom apartment set at $1140 annually for FY 2024, the implied gross yield can be calculated. Given the median home value of $422,607, the annualized FMR translates into a gross yield of approximately 2.70%. This is derived by dividing the annual rent ($1140 * 12 months = $13,680) by the median home value ($422,607).
In contrast, using the market rent figure of $1,438 per month, the gross yield increases significantly. The annualized market rent is $17,256, leading to a gross yield of roughly 4.08%. This calculation is based on the same median home value of $422,607.
The difference between these two yields highlights the financial implications of choosing a Section 8 property over a market-rate rental property. The gross yield from market rent is approximately 1.38 percentage points higher than that from Section 8 rent, indicating a stronger cash flow from market-rate rentals.
However, the decision should also consider the local rental market dynamics. With a renter density of 12.1%, the competition for tenants might be lower compared to densely populated areas. The N/A-day Days on Market (DOM) suggests either a lack of recent sales data or an unusually quick turnover, which could indicate strong demand for rental properties. Given these factors, while market-rate rentals offer a higher gross yield, the stability and guaranteed income from Section 8 may be more attractive to some investors.
In conclusion, for ZIP 50001, the gross yield from Section 8 properties stands at about 2.70%, whereas the gross yield from market-rate rentals is around 4.08%. These figures provide a clear basis for comparison, enabling investors to weigh the benefits of each scenario according to their investment goals and risk tolerance.
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.