Location: Madison, WI | Metro: Madison, WI HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,200 |
| 1 Bedroom | $1,380 |
| 2 Bedrooms | $1,570 |
| 3 Bedrooms | $2,050 |
| 4 Bedrooms | $2,270 |
| 5 Bedrooms | $2,633 |
| 6 Bedrooms | $2,949 |
| 7 Bedrooms | $3,185 |
| 8 Bedrooms | $3,344 |
The analysis for ZIP code 53744 in Unknown, Wisconsin, reveals some limitations due to incomplete data. However, we can still draw some conclusions based on the available information.
The Fair Market Rent (FMR) for a two-bedroom apartment in ZIP 53744 for fiscal year 2024 is set at $1370 per month. To annualize this figure, we multiply it by 12, resulting in an annual rent of $16,440. This is the amount landlords could potentially receive if their property participates in the Section 8 program.
The median home value for ZIP 53744 is currently not available. Without this key figure, it's challenging to calculate the precise gross yield. However, assuming a hypothetical median home value, we can still discuss the implications for cap rates.
In the scenario where the median home value is known, the gross yield would be calculated as the annualized rental income divided by the median home value. For example, if the median home value were $250,000, the gross yield would be 6.58% ($16,440 / $250,000).
The market rent for ZIP 53744 is also not available. If market rents are higher than the FMR, the gross yield for non-Section 8 properties would be greater. Conversely, if market rents are lower, the gross yield would be less than the Section 8 scenario.
Given the lack of data on renter density and days on market (DOM), it's difficult to determine which scenario is more realistic. However, if market rents are typically above the FMR, then the gross yield for market rents would likely be higher, making it a more attractive option for landlords and small-portfolio investors. The decision should be made based on the specific financial goals and risk tolerance of the investor.
Landlords and investors must consider that while Section 8 provides a guaranteed tenant with subsidized rent, there are additional administrative requirements and potential delays in repairs and maintenance. Therefore, even though the gross yield might appear lower when compared to a higher market rent, the stability and predictability of cash flow can outweigh the difference in yield for some investors.
Data Sources: FMR data from HUD (2027).
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.