Location: Eau Claire, WI | Metro: Eau Claire, WI MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,170 |
| 1 Bedroom | $1,170 |
| 2 Bedrooms | $1,450 |
| 3 Bedrooms | $1,950 |
| 4 Bedrooms | $1,960 |
| 5 Bedrooms | $2,274 |
| 6 Bedrooms | $2,547 |
| 7 Bedrooms | $2,751 |
| 8 Bedrooms | $2,889 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 54720 reveals a nuanced picture when it comes to Section 8 cap rates. For a two-bedroom property, the Fair Market Rent (FMR) set at $1,010 per month for FY 2024 translates into an annualized income of $12,120. Given the median home value of $325,039, this implies a gross yield of approximately 3.72%. This calculation is based on the FMR, which is the maximum amount that a landlord can charge a tenant participating in the Section 8 program.
On the other hand, the market rent, as indicated by the Zillow Observed Rental Index (ZORI), stands at $1,441 per month. Annualizing this figure results in a rental income of $17,292 per year, leading to a gross yield of about 5.32%. This higher yield reflects the potential income if the property were rented at market rates rather than being part of the Section 8 program.
Considering the 45.4% renter density in ZIP 54720, it's important to note that while there is a significant portion of renters, the exact number of those who would qualify for and prefer the Section 8 program isn't specified. The N/A-day DOM (Days on Market) suggests that the typical time frame for properties to be listed before they are leased is not available, which could indicate either a very competitive market or a lack of recent transaction data.
In reality, the gross yield of 3.72% derived from the Section 8 FMR is likely more representative of the actual income potential for properties enrolled in the program. While the market rent scenario offers a higher gross yield of 5.32%, the challenges associated with qualifying tenants for Section 8 and the administrative requirements often lead to a lower effective rental rate. Therefore, investors should consider the 3.72% gross yield as a more conservative and accurate estimate for Section 8 properties in this area.
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.