Location: Des Moines-West Des Moines, IA | Metro: Des Moines-West Des Moines, IA 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 | $970 |
| 1 Bedroom | $1,010 |
| 2 Bedrooms | $1,200 |
| 3 Bedrooms | $1,640 |
| 4 Bedrooms | $1,680 |
| 5 Bedrooms | $1,949 |
| 6 Bedrooms | $2,183 |
| 7 Bedrooms | $2,358 |
| 8 Bedrooms | $2,476 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,200 | $245,592 | 0.49% | F |
| 3BR | $1,640 | $356,076 | 0.46% | F |
| 4BR | $1,680 | $441,372 | 0.38% | F |
| 5BR | $1,949 | $635,615 | 0.31% | F |
U.S. Census Bureau data (2024)
A skeptical investor considering investing in ZIP 50003 (Adel, IA) might have several valid concerns. Let's address these one by one using the available data.
Objection 1: Will FMR $970 (zip FY 2024) cover the mortgage on a $392,628 home?
The Fair Market Rent (FMR) for ZIP 50003 in fiscal year 2024 is set at $970. This figure represents the average monthly rent that a tenant can be expected to pay under the Section 8 program. To determine if this amount will cover the mortgage on a home priced at $392,628, we must consider typical mortgage rates and terms. Assuming a 30-year fixed-rate mortgage at an interest rate of 5%, the monthly payment on such a property would be approximately $2,073. Clearly, the FMR of $970 does not cover the full mortgage payment, indicating that landlords would need additional income sources or higher rents outside of the voucher program to break even.
Objection 2: Is there enough renter demand at 24.2%?
The rental vacancy rate in ZIP 50003 is 24.2%. This percentage suggests a relatively high level of vacancy, which could indicate weak demand for rental properties. However, it's important to note that this figure alone does not provide a complete picture of the rental market dynamics. Other factors, such as the number of households participating in the Section 8 program and the overall economic conditions of Adel, IA, should also be considered. High vacancy rates can be beneficial for landlords as they might have more leverage in negotiating lease terms, but it also implies that finding tenants willing to pay the FMR might be challenging.
Objection 3: Will vouchers keep pace with $1,203 market rents?
The market rent in ZIP 50003 is $1,203 per month, significantly higher than the FMR of $970. The discrepancy between the two figures raises questions about whether the Section 8 voucher amounts will remain sufficient to cover market rents. Historically, the U.S. Department of Housing and Urban Development (HUD) adjusts the FMR annually based on changes in housing costs, but there is no guarantee that these adjustments will match the actual market rent increases. Landlords should prepare for potential shortfalls and be ready to either absorb the difference or seek alternative funding sources to maintain profitability.
In conclusion, while ZIP 50003 presents opportunities for landlords and small-portfolio investors, the data highlights significant challenges, particularly regarding mortgage coverage and renter demand. Voucher amounts may lag behind market rents, requiring careful financial planning.
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.