Location: Des Moines-West Des Moines, IA | Metro: Des Moines-West Des Moines, IA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $850 |
| 1 Bedroom | $880 |
| 2 Bedrooms | $1,050 |
| 3 Bedrooms | $1,430 |
| 4 Bedrooms | $1,470 |
| 5 Bedrooms | $1,705 |
| 6 Bedrooms | $1,910 |
| 7 Bedrooms | $2,063 |
| 8 Bedrooms | $2,166 |
U.S. Census Bureau data (2024)
A skeptical investor considering the ZIP code 50277 might raise several concerns regarding the viability of investing in properties under the Section 8 program. Here's how the data addresses those concerns.
Will FMR $970 (ZIP FY 2024) cover the mortgage on a $211,889 home?
The Fair Market Rent (FMR) for ZIP 50277 in fiscal year 2024 is set at $970. This amount needs to be evaluated against the typical mortgage costs for a property priced at $211,889. Assuming a standard 30-year fixed-rate mortgage at an interest rate of around 4%, the monthly payment would be approximately $1,020. Given that the FMR is slightly below this figure, it indicates that covering the mortgage alone would be challenging without additional income sources or cost reductions. However, it's important to consider property taxes and insurance, which can vary widely but typically add another $100-$200 per month to the total housing expense. Therefore, while FMRs are close to covering mortgage payments, they may not fully account for all associated costs.
Is there enough renter demand at 15.5%?
The percentage of renters in ZIP 50277 stands at 15.5%. While this may seem low, it's essential to understand that the demand for affordable housing can still be significant even if the overall rental rate is modest. The number of households participating in the Section 8 program can provide a clearer picture of demand. If the local housing authority has a waiting list for Section 8 vouchers, this suggests strong demand. Additionally, the stability and predictability of Section 8 tenants can be appealing to landlords, especially in areas where other rental options are limited. To fully assess the demand, one would need to look at the number of active voucher holders and the rate of turnover in the local rental market.
Will vouchers keep pace with $775 market rents?
The current market rent in ZIP 50277 is $775, which is below the FMR of $970. This means that vouchers issued by the local housing authority should theoretically cover the market rent. However, the key issue is whether the voucher amounts will adjust to keep up with any future increases in market rents. Historically, voucher amounts have been adjusted annually based on HUD guidelines, but these adjustments may not always match the actual increase in market rents. It's crucial for investors to monitor the local housing market trends and the frequency and extent of voucher adjustments to ensure long-term financial sustainability. If the market rent consistently outpaces the voucher adjustment rates, landlords could face difficulties in maintaining profitability.
In conclusion, while the data provides insights into the challenges and opportunities of investing in ZIP 50277 under the Section 8 program, some aspects require further investigation. Investors must balance the risks and benefits carefully, considering both the financials and the local market dynamics.
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.