Location: Monroe County, WI | Metro: La Crosse-Onalaska, WI-MN HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $770 |
| 1 Bedroom | $890 |
| 2 Bedrooms | $1,110 |
| 3 Bedrooms | $1,460 |
| 4 Bedrooms | $1,720 |
| 5 Bedrooms | $1,995 |
| 6 Bedrooms | $2,234 |
| 7 Bedrooms | $2,413 |
| 8 Bedrooms | $2,534 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 54619 reveals interesting insights into potential investment returns. To begin, let's consider the Federal Market Rent (FMR) for a 2-bedroom apartment, which is set at $980 per month for fiscal year 2024. This annualizes to $11,760. When compared to the median home value of $239,218, the implied gross yield for a property receiving Section 8 payments would be approximately 4.91%. This calculation is derived by dividing the annualized FMR by the median home value.
On the other hand, if we look at the market rent for a 2-bedroom apartment, which is reported at $889 per month based on Census ACS data, this annualizes to $10,668. Using the same median home value of $239,218, the implied gross yield for a property rented at market rates would be about 4.46%. This is calculated similarly by dividing the annualized market rent by the median home value.
The difference between these two gross yields is clear: properties participating in the Section 8 program have a higher implied gross yield compared to those rented at market rates. However, the reality of investment potential must also take into account several factors, including the local rental market dynamics and the specific characteristics of the ZIP code.
In ZIP 54619, only 14.3% of the population are renters, indicating a relatively low demand for rental housing. This suggests that while the Section 8 program offers a guaranteed income source, the market rent scenario might be more challenging due to limited tenant availability. Additionally, the lack of data on days on market (DOM) makes it difficult to assess how quickly a property can be leased out at market rates.
Given these conditions, the Section 8 scenario presents a more stable and predictable income stream, despite the slightly lower gross yield when compared to market rents. The guaranteed payment structure and the government backing provide a level of security that is often preferred by landlords and small-portfolio investors. In conclusion, while the market rent scenario offers a marginally higher gross yield, the Section 8 option is likely more realistic and secure in ZIP 54619, considering the low renter density and uncertain leasing timelines.
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.