Location: Montgomery County, IA | Metro: Omaha-Council Bluffs, NE-IA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $820 |
| 1 Bedroom | $850 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,360 |
| 4 Bedrooms | $1,530 |
| 5 Bedrooms | $1,775 |
| 6 Bedrooms | $1,988 |
| 7 Bedrooms | $2,147 |
| 8 Bedrooms | $2,254 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 51549 reveals some interesting dynamics when considering Section 8 properties. The Fair Market Rent (FMR) for a two-bedroom apartment in this area, as set by HUD for fiscal year 2024, is $980 per month. This translates into an annual rental income of $11,760 if the property is leased under the Section 8 program.
In contrast, the market rent for a similar two-bedroom property is recorded at $1,029 per month according to the Census ACS data. This implies an annual rental income of $12,348 if the property were rented at market rates.
To derive the cap rate, we would typically compare these rental incomes to the median home value. However, for ZIP 51549, the median home value is not available. Despite this limitation, we can still discuss the gross yield based on the available data. The gross yield is calculated by dividing the annual rental income by the property's purchase price. Without the median home value, we cannot provide a precise cap rate, but we can infer that the gross yield for Section 8 properties will be lower than that for market-rate rentals due to the lower monthly rent.
The renter density in ZIP 51549 stands at 26.9%, indicating a moderate demand for rental properties. The Days on Market (DOM) figure is also not available, which means we cannot determine how quickly properties are typically rented out in this area. However, it is worth noting that the Section 8 program can offer a stable source of tenants with guaranteed income, which might offset the lower gross yield.
In terms of the gross yield comparison, it is clear that renting at market rates ($1,029/month) would generate a higher annual income ($12,348) compared to renting under Section 8 ($980/month, $11,760 annually). This makes market-rate rentals more attractive purely from an income standpoint. However, the stability offered by the Section 8 program could be a significant factor for investors looking for consistent cash flow.
Given the moderate renter density and the absence of DOM data, it is advisable to consider the long-term benefits of each scenario. For those prioritizing steady income and lower vacancy risks, Section 8 might be preferable despite the lower gross yield. Conversely, for investors seeking higher returns and willing to manage potential tenant turnover, market-rate rentals could be more appealing.
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.