Location: Scotland County, MO | Metro: Van Buren County, IA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $720 |
| 1 Bedroom | $780 |
| 2 Bedrooms | $960 |
| 3 Bedrooms | $1,210 |
| 4 Bedrooms | $1,560 |
| 5 Bedrooms | $1,810 |
| 6 Bedrooms | $2,027 |
| 7 Bedrooms | $2,189 |
| 8 Bedrooms | $2,298 |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $920 for ZIP 52542 in fiscal year 2026 can sufficiently cover the mortgage on a home priced at $175,989. To address this concern, let's consider current mortgage rates. As of now, the average 30-year fixed-rate mortgage is around 5%. A mortgage on a $175,989 home at this rate would result in monthly payments of approximately $950, which is slightly above the FMR. However, this calculation does not include potential tax benefits and appreciation, which can improve the investment's profitability over time.
The investor may also doubt the adequacy of renter demand at 8.6%. This figure indicates that roughly 8.6% of households in the area rent their homes. While this percentage is relatively low compared to more urban areas, it is important to note that the housing market in ZIP 52542 is quite affordable. The average home value is $163,879, suggesting that many residents can afford to buy rather than rent. Despite the lower demand, the affordability of the market could still attract renters who prefer the flexibility and lower upfront costs of renting.
Another objection might be whether Housing Choice Vouchers will keep pace with the market rent of $758. The voucher program aims to provide rental assistance to low-income families, but it is subject to funding constraints and local policies. Current data does not specify the exact amount of vouchers available or how they adjust to market changes. However, given the average rent is $758, the FMR of $920 suggests that vouchers are likely to cover a significant portion of the rent. Landlords should stay informed about local voucher administration and any changes in policy that could affect their income.
In conclusion, while the data presents some challenges, such as the tight margin between FMR and mortgage payments, the overall picture is positive. The affordable nature of the market in ZIP 52542 can support both homeownership and rental opportunities. It is advisable for investors to monitor local trends and adjust their strategies accordingly.
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.