Location: Iowa County, IA | Metro: Benton County, IA HUD Metro FMR Area
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 | $680 |
| 1 Bedroom | $750 |
| 2 Bedrooms | $970 |
| 3 Bedrooms | $1,260 |
| 4 Bedrooms | $1,310 |
| 5 Bedrooms | $1,520 |
| 6 Bedrooms | $1,702 |
| 7 Bedrooms | $1,838 |
| 8 Bedrooms | $1,930 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,260 | $230,362 | 0.55% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 52209 provides valuable insights into potential investment opportunities. The Fair Market Rent (FMR) for a 2-bedroom apartment in this area, for fiscal year 2024, is set at $970 per month. Annualizing this figure yields an annual rental income of $11,640. In contrast, the market rent for a similar unit, based on Census ACS data, stands at $757 per month, translating to an annual rental income of $9,084.
To determine the gross yield for these two scenarios, we use the median home value of $248,154 as a reference point. For the FMR scenario, the gross yield is calculated as follows: ($11,640 / $248,154) * 100 = 4.7%. This indicates that if a property were rented at the FMR, it would generate a gross yield of approximately 4.7%. On the other hand, the gross yield based on market rent is lower: ($9,084 / $248,154) * 100 = 3.65%. Thus, renting at market rates would result in a gross yield of roughly 3.65%.
The implied gross-yield difference between the FMR and market rent highlights the potential financial benefit of participating in the Section 8 program. However, the decision should also consider the local market dynamics. ZIP code 52209 has a renter density of 23.0%, suggesting that while there is a significant number of renters, the majority of households prefer homeownership. This could impact the demand for rental properties, including those under the Section 8 program.
The Days on Market (DOM) statistic is not available, which means we cannot directly assess how quickly rental units are typically leased in this area. However, given the relatively low renter density, it might be prudent to assume that leasing a property, especially one exclusively for Section 8 tenants, could take longer compared to areas with higher renter populations. This consideration can affect the overall investment strategy and the choice between market rent and FMR.
In conclusion, the FMR scenario offers a higher gross yield of 4.7% compared to the market rent's gross yield of 3.65%. However, the choice between these options should be informed by an understanding of the local rental market, including the time it takes to lease a property and the specific needs of the tenant population. While the higher yield from FMR is attractive, the reality of a lower renter density suggests that market conditions may favor the more conservative approach of market rent.
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.