Location: Fayette County, IA | Metro: Clayton 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 | $1,220 |
| 4 Bedrooms | $1,300 |
| 5 Bedrooms | $1,508 |
| 6 Bedrooms | $1,689 |
| 7 Bedrooms | $1,824 |
| 8 Bedrooms | $1,915 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,220 | $212,124 | 0.58% | F |
| 4BR | $1,300 | $233,888 | 0.56% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 52135 reveals two distinct scenarios based on the Federal Market Rent (FMR) and the market rent figures. Using the annualized 2BR FMR of $920 for FY 2026, the implied gross yield for properties in this area is approximately 4.6%. This calculation is derived by dividing the annual rent ($920) by the median home value ($197,678).
In contrast, using the market rent figure of $434 as reported by the Census ACS, the implied gross yield drops significantly to about 2.2%. This lower yield is calculated similarly, by dividing the annual market rent ($434 x 12 months) by the median home value.
Given the 6.9% renter density in ZIP 52135, it is important to consider how realistic these yields are. The higher FMR-based gross yield of 4.6% is more aligned with the expectations of landlords and small-portfolio investors looking to participate in the Section 8 program. However, the actual performance can be influenced by various factors, including the availability of tenants and the time properties remain on the market.
The N/A-day DOM (days on market) indicates incomplete data regarding how quickly rental units are occupied, which could affect cash flow and vacancy rates. Despite this, the higher gross yield based on FMR is generally more favorable for investors, as it accounts for the government subsidy that covers the difference between the tenant's contribution and the FMR. This scenario assumes that the property qualifies for the Section 8 program and that there is sufficient demand from eligible tenants.
Landlords should be cautious when comparing the FMR-based yield to the market rent yield, as the former is typically higher due to the guaranteed payment structure of the Section 8 program. The lower 2.2% gross yield based on market rent reflects the typical rental market conditions without subsidies and is less likely to attract investors interested in the stability and higher returns offered by the Section 8 program.
In summary, while both gross yields provide insights into potential investment returns, the 4.6% yield based on the FMR is the more realistic scenario for investors considering participation in the Section 8 program in ZIP 52135. This higher yield is supported by the government subsidy and aligns better with the financial goals of those seeking stable rental income through subsidized housing programs.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.