Location: Fremont County, IA | Metro: Fremont 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 | $690 |
| 1 Bedroom | $710 |
| 2 Bedrooms | $930 |
| 3 Bedrooms | $1,280 |
| 4 Bedrooms | $1,320 |
| 5 Bedrooms | $1,531 |
| 6 Bedrooms | $1,715 |
| 7 Bedrooms | $1,852 |
| 8 Bedrooms | $1,945 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $930 | $148,773 | 0.63% | D |
| 3BR | $1,280 | $214,059 | 0.6% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 51639, Farragut, Iowa, reveals interesting insights into the potential returns for landlords and small-portfolio investors. To begin, let's consider the annualized Fair Market Rent (FMR) for a 2-bedroom unit, which is set at $920 for FY 2026, based on the metro area standards. This translates to an annual rental income of $11,040 ($920 x 12 months).
Using the median home value of $183,067, we can calculate the implied gross yield for the Section 8 scenario. The gross yield is derived by dividing the annual rental income by the property value, resulting in a gross yield of approximately 6%. This means that for every dollar invested in a property valued at $183,067, a landlord could expect to earn about 6 cents annually through Section 8 rental income.
Next, let's look at the market rent scenario. According to Census ACS data, the market rent for a 2-bedroom unit in the area is $725 per month. Annualizing this figure gives us an annual rental income of $8,700 ($725 x 12 months). When compared to the median home value, this yields a gross return of roughly 4.75%, indicating that landlords might earn about 4.75 cents for every dollar invested in a similar property under market conditions.
Given the 25.7% renter density in Farragut, it is evident that a significant portion of the population relies on rental housing. However, the lack of Days on Market (DOM) data suggests that there may be limited turnover in the rental market, which could affect the realism of these figures.
In comparing the two scenarios, the Section 8 gross yield of 6% stands out as notably higher than the market rent gross yield of 4.75%. This difference highlights the financial advantage of participating in the Section 8 program over renting at market rates. However, the decision should also factor in the administrative requirements and potential risks associated with the Section 8 program.
Ultimately, the choice between market rent and Section 8 depends on the landlord's tolerance for government oversight and the local rental market dynamics. Given the high gross yield from Section 8 and the moderate renter density, the Section 8 option appears to offer a better financial return for those willing to comply with the program's stipulations.
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.