Location: Sioux County, IA | Metro: Lyon County, IA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $770 |
| 1 Bedroom | $860 |
| 2 Bedrooms | $1,040 |
| 3 Bedrooms | $1,260 |
| 4 Bedrooms | $1,380 |
| 5 Bedrooms | $1,601 |
| 6 Bedrooms | $1,793 |
| 7 Bedrooms | $1,936 |
| 8 Bedrooms | $2,033 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 51240 reveals some key insights for landlords and small-portfolio investors. Using the annualized Fair Market Rent (FMR) for a two-bedroom apartment at $1,150 per month for fiscal year 2026, the implied gross yield can be calculated. This figure translates into an annual rental income of $13,800. Given the median home value in the area is $296,789, the gross yield based on the FMR would be approximately 4.65%. The formula for this calculation is: ($13,800 / $296,789) * 100 = 4.65%.
However, when considering the market rent, which stands at $993 per month according to the Census ACS data, the annual rental income drops to $11,916. With the same median home value, this scenario yields a gross return of about 4.02%. The calculation here is: ($11,916 / $296,789) * 100 = 4.02%.
The 13.1% renter density suggests that the majority of residents in ZIP 51240 are homeowners rather than renters. This implies that the demand for rental properties, including those participating in the Section 8 program, might be lower compared to areas with higher renter populations. Additionally, the N/A-day Days on Market (DOM) indicates incomplete data, which could mean either very quick sales or prolonged periods without accurate tracking, thus adding uncertainty to the local housing market dynamics.
Given these factors, the gross yield derived from the market rent of $993 per month is likely more reflective of the actual rental environment in ZIP 51240. While the FMR provides a benchmark, the reality of rental rates often aligns closer with the market conditions, especially in areas where homeownership is predominant. Therefore, investors should consider the 4.02% gross yield as a more grounded expectation when analyzing potential returns from Section 8 participation in this ZIP code.
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.