Location: Sioux Falls, SD | Metro: Sioux Falls, SD HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $850 |
| 1 Bedroom | $950 |
| 2 Bedrooms | $1,110 |
| 3 Bedrooms | $1,530 |
| 4 Bedrooms | $1,860 |
| 5 Bedrooms | $2,158 |
| 6 Bedrooms | $2,417 |
| 7 Bedrooms | $2,610 |
| 8 Bedrooms | $2,741 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 57021 reveals two distinct scenarios based on the available data. The first scenario uses the annualized Fair Market Rent (FMR) for a 2-bedroom apartment, which is set at $1080 for Fiscal Year 2024. Given the median home value of $358,828 in the area, this implies a gross yield of approximately 30.1%. To calculate this, we divide the annual rent ($1080) by the median home value ($358,828), resulting in a gross yield percentage.
The second scenario involves comparing the FMR to the market rent, which is currently not available (N/A). Without a specific market rent figure, it's impossible to provide an exact gross yield for this scenario. However, it's important to note that the lack of a market rent figure could indicate a less competitive rental market or insufficient data to establish a reliable benchmark.
Given the 21.4% renter density in ZIP 57021, it's reasonable to assume that a significant portion of the housing stock is owner-occupied rather than rented. This lower renter density suggests that the market may be less driven by rental demand compared to areas with higher renter populations. Additionally, the N/A-day Days on Market (DOM) figure indicates incomplete or unavailable data regarding how quickly properties are typically leased in this area, which further complicates the market rent scenario.
In light of these considerations, the first scenario using the FMR of $1080 for a 2-bedroom unit appears more concrete and actionable for investors. While the implied gross yield of 30.1% is attractive, it's essential to recognize that this does not account for operating expenses, vacancy rates, or other factors that would affect the actual net operating income (NOI).
Despite the high gross yield, the relatively low renter density and uncertain market conditions suggest that investors should approach this ZIP code with caution. The 30.1% gross yield based on FMR provides a starting point for analysis, but the reality of achieving such a yield may be tempered by the local market dynamics and the challenges associated with finding tenants in a less densely rented 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.