Location: Kossuth County, IA | Metro: Kossuth 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 | $730 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $980 |
| 3 Bedrooms | $1,170 |
| 4 Bedrooms | $1,290 |
| 5 Bedrooms | $1,496 |
| 6 Bedrooms | $1,676 |
| 7 Bedrooms | $1,810 |
| 8 Bedrooms | $1,901 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $980 | $158,604 | 0.62% | D |
| 3BR | $1,170 | $201,660 | 0.58% | F |
| 4BR | $1,290 | $223,988 | 0.58% | F |
| 5BR | $1,496 | $411,236 | 0.36% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 50511, Algona, Iowa, provides insight into potential investment returns. The Fair Market Rent (FMR) for a two-bedroom property in Algona for fiscal year 2026 is set at $950 annually. Meanwhile, the Census ACS indicates a market rent of $890 per month. Using these figures, we can derive the implied gross yields for both scenarios.
First, let's calculate the annualized FMR and market rent figures. The annualized FMR for a two-bedroom unit is $950, while the annualized market rent is $10,680 ($890 x 12 months).
To find the implied gross yield, we divide the annual rental income by the median home value of $179,341. For the FMR scenario, the gross yield is calculated as follows:
$950 / $179,341 = 0.0053 or 0.53%
This means that under the FMR scenario, an investor would expect a gross yield of approximately 0.53%. Now, for the market rent scenario, the gross yield calculation is:
$10,680 / $179,341 = 0.0595 or 5.95%
Under the market rent scenario, the gross yield increases significantly to about 5.95%. This stark contrast highlights the difference between government-set rents and market-driven rents.
The 24.9% renter density in Algona suggests that there is a notable but not overwhelming demand for rental properties. Given this figure, it is important to consider the likelihood of achieving either the FMR or market rent levels. The N/A-day DOM (Days on Market) implies that the local real estate market is either very efficient or lacks sufficient data to provide a clear trend, making it difficult to predict vacancy rates accurately.
In practice, the market rent of $890 per month appears more realistic due to the higher gross yield it offers. A gross yield of 5.95% aligns better with typical expectations for rental investments, whereas the 0.53% yield based on FMR is exceptionally low and likely unsustainable without significant subsidies or other financial incentives. Landlords and small-portfolio investors should focus on the market rent scenario to gauge potential returns, keeping in mind the local renter density and the efficiency of the real estate market.
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.