Section 8 Fair Market Rent (FMR) for ZIP 57058 - 2027

FY 2027 Fair Market Rent Rates

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

Housing Authorities Serving ZIP 57058

• Madison Housing and Redevelopment Commission (Madison, SD) - 161 Section 8 vouchers
• Howard Housing and Redevelopment Commission (Howard, SD)

To determine if you should buy in ZIP 57058 (Salem, SD) for Section 8 investment, follow this decision tree:

1) Does the FMR of $1000 (for ZIP 57058 in FY 2024) cover the debt service on a $250,482 property?

• No: The Fair Market Rent (FMR) of $1000 does not sufficiently cover the debt service on a property valued at $250,482. Debt service typically includes mortgage payments, property taxes, insurance, and maintenance costs. Given the property value, these costs would likely exceed the FMR amount.
• Yes: Proceed to the next question.

2) Is the market rent of $1,013 (from Census ACS) above, at, or below the FMR?

• Market Rent Below FMR: The market rent is slightly above the FMR at $1,013. This suggests that while Section 8 tenants may pay less than what the market could offer, there is minimal difference. Landlords should be prepared for the possibility of lower rental income compared to market rates.
• Market Rent At or Above FMR: With the market rent being above the FMR, landlords can potentially leverage higher rents from non-Section 8 tenants. However, this also means Section 8 tenants will pay less than market rate, which must be weighed against the benefits of stable tenancy.

3) Are 27.0% renters + N/A-day days on market (DOM) sufficient demand for a Section 8 property?

• No: If the days on market (DOM) are significantly high, this indicates low demand and difficulty in renting out properties. Given the 27.0% of renters in Salem, SD, without a specific DOM figure, it's challenging to assess the exact demand level. However, the percentage of renters alone does not guarantee sufficient demand for a Section 8 property.
• Yes: With 27.0% of the population renting, there is a notable portion of potential tenants. If the DOM is low or moderate, this suggests a healthy demand for rentals, making it a viable option for Section 8 investment.
• It Depends: Without a specific DOM figure, the viability of investing in Section 8 properties hinges on the local rental market dynamics. A higher percentage of renters indicates a larger pool of potential tenants, but the actual demand and competition need further investigation.

In conclusion, the decision to invest in ZIP 57058 for Section 8 properties primarily depends on whether the FMR covers your debt service and the specifics of the local rental market beyond the provided data points. Landlords must carefully evaluate these factors before making an investment decision.

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.