Location: Trempealeau County, WI | Metro: Eau Claire, WI MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $840 |
| 1 Bedroom | $870 |
| 2 Bedrooms | $1,070 |
| 3 Bedrooms | $1,430 |
| 4 Bedrooms | $1,430 |
| 5 Bedrooms | $1,659 |
| 6 Bedrooms | $1,858 |
| 7 Bedrooms | $2,007 |
| 8 Bedrooms | $2,107 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate for ZIP code 54770 provides a detailed insight into potential investment opportunities for landlords and small-portfolio investors. Based on the Fair Market Rent (FMR) for a 2-bedroom apartment set at $910 per month for fiscal year 2024, the annualized rent would be $10,920. This figure represents the maximum allowable rent for tenants participating in the Section 8 program.
In contrast, the market rent for a similar property is listed at $835 per month according to the Census ACS data, translating to an annualized rent of $10,020. The median home value in this ZIP code is $280,510, which forms the basis for calculating the gross yield for both scenarios.
For the Section 8 scenario, the implied gross yield can be calculated by dividing the annualized rent by the median home value. This yields a gross yield of approximately 3.89% ($10,920 / $280,510 * 100). On the other hand, the market rent scenario results in a gross yield of about 3.57% ($10,020 / $280,510 * 100).
The higher gross yield associated with the Section 8 scenario suggests that, on paper, it offers a better return on investment compared to the market rent scenario. However, the reality of rental markets must also be considered. With a renter density of only 14.5%, the demand for rental properties, including those under the Section 8 program, may be limited. Additionally, the lack of data on days on market (DOM) indicates either a stable market where listings move quickly or a less active market where listings may linger longer.
Given these factors, while the Section 8 scenario offers a slightly higher gross yield, the actual performance might be influenced by the lower overall demand for rentals. Landlords and investors should weigh the guaranteed income stream of Section 8 against the potentially quicker turnover and broader appeal of market-rate rentals. The choice between these two scenarios depends largely on the investor's risk tolerance and long-term goals.
In summary, the Section 8 cap rate scenario presents a gross yield of 3.89%, whereas the market rent scenario offers a gross yield of 3.57%. The decision to invest in Section 8 properties in ZIP 54770 should consider the local rental market dynamics, particularly the low renter density and the implications of guaranteed versus variable income streams.
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.