Location: Lyon County, IA | Metro: Lyon County, IA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $710 |
| 1 Bedroom | $730 |
| 2 Bedrooms | $960 |
| 3 Bedrooms | $1,140 |
| 4 Bedrooms | $1,260 |
| 5 Bedrooms | $1,462 |
| 6 Bedrooms | $1,637 |
| 7 Bedrooms | $1,768 |
| 8 Bedrooms | $1,856 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 51241 reveals some interesting insights for landlords and small-portfolio investors. To begin with, let's consider the Federal Market Rent (FMR) for a two-bedroom apartment, which is set at $950 per month for fiscal year 2026. This annualizes to $11,400. When compared to the median home value of $337,293, the implied gross yield is approximately 3.38%. This calculation is based on the assumption that the rental income would be derived from a property equivalent to the median home value.
On the other hand, the market rent for a two-bedroom apartment in ZIP 51241, according to the Census ACS, is $864 per month. Annualizing this figure yields $10,368. Using the same median home value, the implied gross yield under this scenario drops to about 3.07%. The difference between these two gross yields highlights the potential impact of relying on Section 8 versus market rents.
The 21.3% renter density suggests that a significant portion of the population in ZIP 51241 does not rent, which could indicate a smaller pool of potential tenants for landlords. However, the N/A-day DOM (days on market) implies that there is limited data available regarding how quickly properties are rented out, making it difficult to gauge the speed at which a landlord can expect to fill vacancies.
Given the higher implied gross yield of 3.38% when using the FMR, this scenario appears more favorable for investors seeking a higher return on investment. However, it's important to note that the actual gross yield will depend on the specifics of the property, including any subsidies received from the Section 8 program, and the ongoing demand for rental units in the area.
In conclusion, while the Section 8 FMR provides a slightly better gross yield, the reality of the situation must also take into account the renter density and the availability of data on rental turnover rates. Landlords should carefully consider these factors before deciding whether to participate in the Section 8 program or seek market-rate tenants.
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.