Location: Lafayette County, WI | Metro: Lafayette County, WI
| Unit Size | Monthly FMR |
|---|---|
| Studio | $760 |
| 1 Bedroom | $870 |
| 2 Bedrooms | $1,050 |
| 3 Bedrooms | $1,410 |
| 4 Bedrooms | $1,600 |
| 5 Bedrooms | $1,856 |
| 6 Bedrooms | $2,079 |
| 7 Bedrooms | $2,245 |
| 8 Bedrooms | $2,357 |
U.S. Census Bureau data (2024)
A skeptical investor looking into ZIP code 53586 might have several concerns regarding the feasibility of investing in rental properties through the Section 8 program. Here's a detailed look at those concerns and how they stand up to the facts.
Objection 1: Will Fair Market Rent (FMR) of $970 (metro FY 2026) cover the mortgage on a $196,617 home?
The short answer is no. The FMR of $970 is unlikely to cover the mortgage payments on a home valued at $196,617, especially considering that mortgage payments typically include principal, interest, taxes, and insurance (PITI). To provide a clearer picture, let's break it down. Assuming a 30-year fixed-rate mortgage with an average interest rate of around 4%, the monthly payment on a $196,617 loan would be approximately $950. However, this figure does not account for property taxes and insurance, which can significantly increase the total monthly mortgage cost. For example, if property taxes are $2,000 annually and insurance costs another $1,000 annually, these add roughly $167 per month to the mortgage payment, bringing the total closer to $1,117. This exceeds the $970 FMR for the area.
Objection 2: Is there enough renter demand at 21.8%?
The 21.8% renter occupancy rate suggests that while there is a significant portion of renters in ZIP 53586, it may not be high enough to ensure a steady stream of applicants for Section 8 properties. In comparison, areas with higher renter demand might offer more competition among tenants, leading to fewer vacancies. However, it's important to note that the percentage alone does not tell the whole story. The actual number of renters and the vacancy rates are also critical factors. Additionally, the quality of housing stock and the reputation of landlords play a role in attracting tenants. If the property is well-maintained and in good standing with the local housing authority, it could still attract consistent tenant interest despite the lower percentage.
Objection 3: Will vouchers keep pace with $1,125 market rents?
The FMR set by the Housing and Urban Development (HUD) is designed to reflect the average market rent for a standard unit in a given area. However, in ZIP 53586, where the market rent is $1,125, the FMR of $970 falls short. This means that landlords participating in the Section 8 program may find themselves subsidizing the difference between the voucher amount and the market rent. While HUD adjusts the FMR annually based on market conditions, there is no guarantee that these adjustments will fully align with the local market rents. Therefore, it's crucial for landlords to consider this potential shortfall when budgeting for their investments.
To summarize, while ZIP 53586 presents some challenges for landlords and small-portfolio investors, particularly with regards to covering mortgage costs and keeping pace with market rents, it's not without opportunities. Careful consideration of the data and strategic planning can help mitigate these risks.
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.