Location: Clarke County, 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 | $660 |
| 1 Bedroom | $780 |
| 2 Bedrooms | $950 |
| 3 Bedrooms | $1,280 |
| 4 Bedrooms | $1,280 |
| 5 Bedrooms | $1,485 |
| 6 Bedrooms | $1,663 |
| 7 Bedrooms | $1,796 |
| 8 Bedrooms | $1,886 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $950 | $147,426 | 0.64% | D |
| 3BR | $1,280 | $204,699 | 0.63% | D |
| 4BR | $1,280 | $281,103 | 0.46% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 50213 in Osceola, IA, reveals interesting insights into potential investment returns. The Fair Market Rent (FMR) for a two-bedroom apartment in fiscal year 2024 is set at $970 per month, while the market rent, as indicated by the Zillow Observed Rent Index (ZORI), stands at $1,218 monthly. To understand the gross yield, we annualize these figures against the median home value of $185,956.
First, let's calculate the gross yield based on the FMR. With an annualized rent of $11,640 ($970 x 12 months), the gross yield for a Section 8 property would be approximately 6.26%. This is derived from the formula: Gross Yield = (Annual Rent / Median Home Value) x 100. Thus, 6.26% = ($11,640 / $185,956) x 100.
Next, using the market rent figure of $1,218 per month, the annualized rent comes out to $14,616. The gross yield for a market-rent property would then be about 7.86%, calculated similarly: 7.86% = ($14,616 / $185,956) x 100.
Given that 31.2% of residents in ZIP 50213 are renters, the demand for rental properties is moderate. However, the N/A-day Days on Market (DOM) indicates incomplete data, suggesting either low turnover or a lack of recent transactions, which makes it difficult to gauge the current market dynamics accurately.
Comparing the two scenarios, the gross yield from market rent is higher by 1.6 percentage points. While this difference might seem significant, the reality of achieving the higher yield must be considered. Section 8 rents provide a stable income stream with government backing, though at a lower rate. On the other hand, market rents can fluctuate and require a landlord to actively manage occupancy and tenant turnover.
In conclusion, for ZIP 50213, a Section 8 gross yield of 6.26% is a conservative but reliable estimate, whereas a market-rent gross yield of 7.86% offers a potentially higher return but with greater risk and management requirements. Given the moderate renter density and incomplete DOM data, investors should carefully weigh the trade-offs between stability and potential higher returns.
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.