Location: Wood County, WI | Metro: Clark County, WI
| Unit Size | Monthly FMR |
|---|---|
| Studio | $810 |
| 1 Bedroom | $820 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,300 |
| 4 Bedrooms | $1,450 |
| 5 Bedrooms | $1,682 |
| 6 Bedrooms | $1,884 |
| 7 Bedrooms | $2,035 |
| 8 Bedrooms | $2,137 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 54420 reveals interesting insights into the potential returns for landlords and small-portfolio investors. Using the provided data points, we can calculate the implied gross yields for both the Fair Market Rent (FMR) and market rent scenarios.
First, let's consider the FMR scenario. The annualized 2BR FMR for FY 2026 is set at $970 per month. This translates to an annual rental income of $11,640. Given the median home value of $257,042, the implied gross yield based on FMR is approximately 4.5%. To calculate this, we use the formula: (Annual Rental Income / Median Home Value) * 100 = Gross Yield. Thus, (11,640 / 257,042) * 100 ≈ 4.5%.
Next, we look at the market rent scenario. The Census ACS reports a market rent of $663 per month for a 2BR unit. This equates to an annual rental income of $7,956. Using the same median home value, the implied gross yield based on market rent is roughly 3.1%. Calculating this, (7,956 / 257,042) * 100 ≈ 3.1%.
The gross yield comparison clearly shows that the FMR scenario offers a higher potential return compared to the market rent scenario. However, the choice between these two scenarios should be informed by the local rental market dynamics and the actual demand for Section 8 housing.
A key consideration is the 18.8% renter density in ZIP 54420. This indicates a relatively low proportion of renters in the area, suggesting that landlords might face competition when trying to attract Section 8 tenants. Additionally, the N/A-day DOM (Days On Market) implies that there is no readily available data on how quickly properties are rented out, which could mean that either finding tenants or securing higher rents could be challenging.
Given these factors, while the FMR scenario presents a more attractive gross yield, it may not be the most realistic expectation for all landlords. The market rent scenario, although offering a lower gross yield, might better reflect the actual rental income achievable in ZIP 54420, considering the limited number of renters and the lack of data on rental speed. Landlords should weigh these considerations carefully when deciding whether to participate in the Section 8 program in this ZIP code.
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.