Location: Lee County, IA | Metro: Lee 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 | $650 |
| 1 Bedroom | $710 |
| 2 Bedrooms | $930 |
| 3 Bedrooms | $1,230 |
| 4 Bedrooms | $1,370 |
| 5 Bedrooms | $1,589 |
| 6 Bedrooms | $1,780 |
| 7 Bedrooms | $1,922 |
| 8 Bedrooms | $2,018 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $930 | $178,899 | 0.52% | F |
| 3BR | $1,230 | $235,637 | 0.52% | F |
| 4BR | $1,370 | $229,928 | 0.6% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 52625 in Iowa provides a detailed look at potential rental income scenarios based on the Federal Market Rent (FMR) and market rent figures. For a two-bedroom unit, the annualized FMR for fiscal year 2026 is set at $920, while the Census ACS reports the market rent at $642.
To derive the gross yield, we first calculate the annual rental income for both scenarios. The annualized FMR of $920 translates to an annual rental income of $11,040. Dividing this by the median home value of $218,077 yields an implied gross yield of approximately 5.06%. On the other hand, the market rent of $642 amounts to an annual rental income of $7,704. This results in an implied gross yield of about 3.53% when divided by the median home value.
The higher gross yield based on the FMR is more theoretical, as it assumes that all units will be rented at the FMR rate, which may not always reflect actual rental conditions. Given the 14.1% renter density in ZIP 52625, it's important to consider the local rental market dynamics. The lower gross yield based on market rent is more aligned with the current economic reality of the area.
The lack of data on the Days on Market (DOM) for rentals makes it challenging to predict how quickly a property could be leased at either rate. However, the 14.1% renter density suggests that there is a smaller pool of potential renters compared to homeowners, which could impact the speed of leasing and the ability to command higher rents consistently.
In conclusion, while the FMR-based scenario offers a gross yield of 5.06%, the more realistic market rent scenario provides a gross yield of 3.53%. Landlords and small-portfolio investors should focus on the latter figure when making investment decisions, as it reflects the current market conditions more accurately. The higher gross yield might only be achievable under ideal circumstances where all units are leased at the FMR rate without delay.
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.