Location: Marion County, IA | Metro: Marion County, IA
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 | $670 |
| 1 Bedroom | $780 |
| 2 Bedrooms | $960 |
| 3 Bedrooms | $1,140 |
| 4 Bedrooms | $1,300 |
| 5 Bedrooms | $1,508 |
| 6 Bedrooms | $1,689 |
| 7 Bedrooms | $1,824 |
| 8 Bedrooms | $1,915 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $780 | $99,977 | 0.78% | D |
| 2BR | $960 | $147,873 | 0.65% | D |
| 3BR | $1,140 | $227,878 | 0.5% | F |
| 4BR | $1,300 | $300,895 | 0.43% | F |
| 5BR | $1,508 | $367,071 | 0.41% | F |
U.S. Census Bureau data (2024)
In evaluating ZIP code 50138, located in Knoxville, Iowa, for investment opportunities under the Section 8 housing program, several key concerns arise. Let's address these directly using the available data.
Objection 1: Will the Fair Market Rent (FMR) of $960 for the metro area in fiscal year 2026 cover the mortgage on a home priced at $203,490?
The FMR of $960 must be compared against the mortgage costs of a $203,490 home. Assuming a typical fixed-rate mortgage of 30 years at an interest rate of around 5%, the monthly mortgage payment would be approximately $1,090. This figure does not include property taxes, insurance, or maintenance costs, which could add another $200-$300 per month. Therefore, the FMR alone will not cover the mortgage expenses, leaving a shortfall of roughly $330-$430 per month. Investors must consider additional income sources or prepare to subsidize the difference.
Objection 2: Is there enough renter demand at 19.1%?
The rental vacancy rate of 19.1% suggests that there is a moderate level of supply relative to demand. However, it's important to note that a higher vacancy rate can indicate a more competitive market for landlords, potentially making it harder to find tenants willing to pay the FMR. To mitigate this risk, understanding the local job market and population trends is crucial. If the area is experiencing growth or has stable employment opportunities, the demand for rentals may increase over time. Conversely, if the economy is sluggish, maintaining occupancy at desired rates could prove challenging.
Objection 3: Will vouchers keep pace with $870 market rents?
The current market rent of $870 is below the FMR of $960, indicating that voucher holders may have sufficient funds to cover the cost of renting properties at the market rate. However, the critical question is whether the voucher amounts will adjust to match future increases in market rents. Historically, voucher adjustments have been tied to annual changes in the FMR, but there is no guarantee that these increases will perfectly align with local market conditions. Investors should monitor local rent trends and the frequency of voucher adjustments to ensure they remain financially viable.
While the data provides insight into these objections, it's essential to acknowledge that it does not offer a complete picture of all potential risks and rewards. Local economic factors, tenant behavior, and policy changes can significantly impact the success of a Section 8 investment. Careful due diligence and ongoing management are necessary to navigate these uncertainties effectively.
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.