Location: Webster County, IA | Metro: Calhoun 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 | $690 |
| 1 Bedroom | $730 |
| 2 Bedrooms | $930 |
| 3 Bedrooms | $1,120 |
| 4 Bedrooms | $1,390 |
| 5 Bedrooms | $1,612 |
| 6 Bedrooms | $1,805 |
| 7 Bedrooms | $1,949 |
| 8 Bedrooms | $2,046 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,120 | $195,331 | 0.57% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 50563 reveals some interesting dynamics when comparing federally mandated Fair Market Rents (FMRs) to actual market rents. For a two-bedroom property, the annualized FMR set by the government for fiscal year 2026 is $920, while the Census ACS reports an average market rent of $704.
To derive the gross yield, we first calculate the annual rental income under both scenarios. With an FMR of $920, the annual rental income would be $11,040. Given the median home value in ZIP 50563 is $192,589, the implied gross yield based on FMR would be approximately 5.74%. This calculation is straightforward: divide the annual rental income by the property value ($11,040 / $192,589).
In contrast, using the market rent figure of $704, the annual rental income drops to $8,448. The implied gross yield under this scenario is significantly lower at around 4.38% ($8,448 / $192,589).
The disparity between these two gross yields highlights the importance of understanding the local rental market dynamics. Despite the higher FMR, the actual market rent paints a more realistic picture of potential income for landlords and small-portfolio investors. This is especially true considering the renter density in ZIP 50563 is only 20.8%, indicating a smaller pool of potential tenants who might qualify for Section 8 housing assistance.
The N/A-day Days on Market (DOM) suggests that there is no readily available data on how quickly properties are rented out, which could imply either a stable rental market or one that is less transparent. However, given the lower market rent, it's reasonable to assume that the actual gross yield will likely hover closer to the 4.38% mark rather than the 5.74% implied by FMRs. This conclusion is drawn from the practical reality that many tenants may not be willing or able to pay the higher FMR rates, thus making the lower market rent a more reliable indicator for investment purposes.
In summary, while the Section 8 FMRs provide a benchmark for maximum allowable rent, the actual market conditions suggest a more modest gross yield. Investors should consider the 4.38% gross yield as a more accurate reflection of their potential returns in ZIP 50563.
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.