Location: Worth County, IA | Metro: Cerro Gordo County, IA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $710 |
| 1 Bedroom | $730 |
| 2 Bedrooms | $940 |
| 3 Bedrooms | $1,300 |
| 4 Bedrooms | $1,340 |
| 5 Bedrooms | $1,554 |
| 6 Bedrooms | $1,740 |
| 7 Bedrooms | $1,879 |
| 8 Bedrooms | $1,973 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 50444 reveals a nuanced picture when comparing the Federal Market Rent (FMR) and the market rent figures. Using the annualized 2BR FMR of $970 for FY 2026, the gross yield for properties participating in the Section 8 program can be calculated. The median home value in ZIP 50444 is $209,911. Therefore, the implied gross yield for the FMR scenario is approximately 4.62%, derived from dividing the annualized rent by the median home value.
Conversely, using the market rent figure of $794 per month from the Census ACS, the gross yield drops significantly. This yields an implied gross yield of about 3.74%. This calculation is based on the same principle: the annual rent divided by the median home value.
Given the 14.7% renter density in ZIP 50444, it's important to consider the implications for both scenarios. The lower renter density suggests that a smaller portion of the population is likely to be seeking rental housing, which could impact the demand for Section 8 properties. Additionally, the N/A-day DOM (days on market) indicates incomplete data regarding how quickly properties are rented, which could mean either high demand or other factors affecting the speed of tenancy.
The FMR scenario presents a higher gross yield, making it more attractive at first glance. However, the reality of the situation should also factor in the likelihood of finding tenants willing to pay the FMR versus the actual market rate. With only 14.7% of the population renting, landlords must weigh the benefits of the higher Section 8 rent against the potential challenges of tenant selection and the stability of the program.
In conclusion, while the Section 8 program offers a gross yield of 4.62%, the market rent scenario provides a yield of 3.74%. Given the limited renter density, the market rent scenario might be more realistic for landlords and small-portfolio investors, as it reflects the actual demand and willingness to pay in the local rental market. However, the decision ultimately depends on the investor's risk tolerance and long-term goals.
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.