Location: Lake County, SD | Metro: Sioux Falls, SD HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $780 |
| 1 Bedroom | $890 |
| 2 Bedrooms | $1,050 |
| 3 Bedrooms | $1,430 |
| 4 Bedrooms | $1,750 |
| 5 Bedrooms | $2,030 |
| 6 Bedrooms | $2,274 |
| 7 Bedrooms | $2,456 |
| 8 Bedrooms | $2,579 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,050 | $223,563 | 0.47% | F |
| 3BR | $1,430 | $322,619 | 0.44% | F |
| 4BR | $1,750 | $372,081 | 0.47% | F |
U.S. Census Bureau data (2024)
The potential pitfalls of investing in ZIP 57018 in Colton, SD, under the Section 8 program are significant. Tenant turnover is a critical issue, with the market rent at $736 being notably lower than the Fair Market Rent (FMR) of $910 for FY 2024. This discrepancy can lead to higher turnover rates as tenants seek properties that better match their budget, increasing operational costs for landlords. Vacancy exposure is another concern, as the days on market (DOM) data is currently unavailable, indicating a lack of consistent rental activity which could result in prolonged periods without rental income. The deferred maintenance exposure is substantial, considering the typical home value of $299,966 and the median income of $97,500. Landlords might find themselves shouldering the costs of necessary repairs and upgrades that tenants cannot afford, potentially straining cash flows.
Despite these challenges, the high renter share of 19.5% suggests a robust demand for rental housing, particularly for Section 8 vouchers. This dense concentration of renters typically translates into a steady pool of voucher holders looking for accommodation, thereby mitigating some of the vacancy risks. The combination of a relatively low market rent and a high proportion of renters indicates a strong likelihood of finding tenants who qualify for and utilize Section 8 vouchers, ensuring a stable income stream.
In conclusion, the investment in ZIP 57018 under the Section 8 program carries a moderate risk for a first-time Section 8 landlord, given the balance between operational challenges and the potential for a reliable tenant base.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.