Location: Howard County, IA | Metro: Chickasaw 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 | $720 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $970 |
| 3 Bedrooms | $1,320 |
| 4 Bedrooms | $1,330 |
| 5 Bedrooms | $1,543 |
| 6 Bedrooms | $1,728 |
| 7 Bedrooms | $1,866 |
| 8 Bedrooms | $1,959 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $970 | $151,315 | 0.64% | D |
| 3BR | $1,320 | $213,300 | 0.62% | D |
| 4BR | $1,330 | $260,192 | 0.51% | F |
| 5BR | $1,543 | $370,698 | 0.42% | F |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 50659 in Iowa reveals interesting insights into potential investment yields. The Fair Market Rent (FMR) for a two-bedroom apartment in the metro area for fiscal year 2026 is set at an annualized rate of $950. This figure represents the government's benchmark for rental assistance in the area. In contrast, the Census ACS data indicates a market rent of $737 for the same type of unit.
To derive the gross yield, we use the median home value of $217,079 as a reference point. The implied gross yield for the Section 8 scenario is calculated by dividing the annualized FMR by the median home value. For ZIP 50659, this results in a gross yield of approximately 4.3%. On the other hand, using the market rent figure of $737, the implied gross yield is roughly 3.4%.
The higher gross yield of 4.3% under the Section 8 scenario suggests a potentially more stable income stream due to the guaranteed payment structure and lower risk of vacancy. However, the reality of the situation must also consider the local rental market dynamics. With a renter density of only 22.1%, it's evident that homeownership is prevalent, which might indicate a less robust demand for rental properties. Furthermore, the lack of data on days on market (DOM) could imply either a balanced market or a lack of recent transactions, making it challenging to predict how quickly a property can be leased out.
In conclusion, while the Section 8 scenario offers a higher gross yield at 4.3%, the actual performance may vary based on the local rental market conditions and the landlord's ability to manage a Section 8 property effectively. The market rent scenario, at 3.4%, reflects a more conservative estimate of what landlords might expect if they were to rely solely on market rates. Investors should carefully weigh these factors when considering investments in ZIP 50659.
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.