Location: Palo Alto County, IA | Metro: Clay 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 | $810 |
| 1 Bedroom | $820 |
| 2 Bedrooms | $1,070 |
| 3 Bedrooms | $1,400 |
| 4 Bedrooms | $1,410 |
| 5 Bedrooms | $1,636 |
| 6 Bedrooms | $1,832 |
| 7 Bedrooms | $1,979 |
| 8 Bedrooms | $2,078 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,400 | $186,431 | 0.75% | D |
U.S. Census Bureau data (2024)
The analysis for Section 8 properties in ZIP code 51364 is centered around the significant gap between the Fair Market Rent (FMR) and the actual market rent. The FMR for the metro area in fiscal year 2026 is set at $1,030, while the Census ACS reports that the current market rent stands at $625. This creates a gap of $405, or approximately 64.7%, which is a critical figure for both landlords and small-portfolio investors.
In this scenario, where the FMR exceeds the market rent, the potential for a yield play emerges. Landlords can leverage the higher FMR to secure rental income that is well above the local market rate. For instance, a property rented at the FMR would generate an additional $405 per month compared to renting it at the market price. This extra income can significantly enhance the yield on investment properties, making them more attractive to investors looking for solid returns.
However, it's important to anchor this analysis within the broader context of ZIP 51364. Only 7.2% of residents are renters, indicating a relatively low demand for rental properties. Additionally, the median home value in the area is $185,343, and the median household income is $66,875. These factors suggest that while the opportunity to earn above-market rents exists, the overall rental market may be less active due to the high percentage of homeownership and the relative affordability of owning a home in this area.
Despite these considerations, the financial benefits of participating in the Section 8 program remain compelling. Landlords who accept housing vouchers can receive steady rental payments at the FMR level, even if the open-market rent is lower. This stability can be particularly advantageous in areas with fluctuating rental markets or economic uncertainties.
To summarize, the gap between the FMR and market rent in ZIP 51364 presents a clear opportunity for landlords to increase their yields through participation in the Section 8 program. However, the decision should also take into account the limited rental market and the financial profile of the area. By securing rental income at the higher FMR rate, landlords can achieve better returns on their investments, despite the relatively low percentage of renters in the community.
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.