Location: Sawyer County, WI | Metro: Sawyer County, WI
| Unit Size | Monthly FMR |
|---|---|
| Studio | $920 |
| 1 Bedroom | $920 |
| 2 Bedrooms | $1,210 |
| 3 Bedrooms | $1,440 |
| 4 Bedrooms | $1,590 |
| 5 Bedrooms | $1,844 |
| 6 Bedrooms | $2,065 |
| 7 Bedrooms | $2,230 |
| 8 Bedrooms | $2,342 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate scenario for ZIP code 54862 reveals some key insights into potential investment returns. The Fair Market Rent (FMR) for a 2-bedroom apartment in this area, based on fiscal year 2026 data, is set at an annualized figure of $1,080. This contrasts with the market rent, which stands at $960 per month according to the Census ACS.
To derive the implied gross yield for these scenarios, we must first understand that the fair market rent is a benchmark used by the government to determine eligibility for housing assistance programs, including Section 8. However, the actual market rent provides a more accurate reflection of what tenants are willing to pay in the current rental market.
In the case of Section 8, the implied gross yield would be based on the FMR. Given that the median home value is not available, we can estimate the gross yield using the average monthly FMR and multiplying it by 12 months. This gives us an annual rent of $12,960 ($1,080 x 12). Assuming a typical property value in this ZIP code, the gross yield would be lower than what might be expected from market rents due to the nature of the program's subsidies.
When considering the market rent of $960 per month, the annual rent would amount to $11,520 ($960 x 12). This represents a higher gross yield compared to the Section 8 scenario, assuming the same property value. The difference in gross yields between the two scenarios is significant, with the market rent providing a stronger return on investment.
Given the 9.0% renter density in ZIP 54862, it is important to note that the number of days on the market (DOM) is not available. However, the low renter density suggests that the pool of potential tenants may be limited, which could impact the speed at which a property is rented out and the overall demand for rental units. This makes the market rent scenario more realistic for most investors, as it accounts for the actual willingness to pay of tenants in the area.
In conclusion, while the Section 8 program offers a stable source of income, the implied gross yield is lower than what can be achieved through market rents. For a 2-bedroom apartment, the annualized FMR of $12,960 versus the market rent of $11,520 shows a disparity favoring market rents. The limited renter population in ZIP 54862 further supports the preference for market rates, ensuring a better alignment with tenant demand and a higher return on investment.
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.