Location: Clay County, SD | Metro: Clay County, SD
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 | $710 |
| 1 Bedroom | $810 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,410 |
| 4 Bedrooms | $1,700 |
| 5 Bedrooms | $1,972 |
| 6 Bedrooms | $2,209 |
| 7 Bedrooms | $2,386 |
| 8 Bedrooms | $2,505 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,010 | $198,875 | 0.51% | F |
| 3BR | $1,410 | $267,803 | 0.53% | F |
| 4BR | $1,700 | $297,463 | 0.57% | F |
| 5BR | $1,972 | $392,939 | 0.5% | F |
U.S. Census Bureau data (2024)
A skeptical investor considering Vermillion, SD (ZIP 57069) might raise several concerns regarding the feasibility of investing in rental properties, particularly those participating in the Section 8 program. Here are some key objections and the data that addresses them:
Will FMR $930 (metro FY 2026) cover the mortgage on a $272,397 home?
The Fair Market Rent (FMR) for Vermillion, SD is set at $930 per month for FY 2026. To determine if this will cover the mortgage on a home priced at $272,397, we must consider the typical interest rates and loan terms. Assuming a 30-year fixed-rate mortgage with an interest rate of 4.5%, the monthly mortgage payment would be approximately $1,365. This means that the FMR does not fully cover the mortgage payment, leaving a shortfall of about $435 per month. Investors would need to factor in other sources of income or subsidies to make up for this gap.
Is there enough renter demand at 53.8%?
Renter demand in Vermillion, SD stands at 53.8%. While this figure indicates a moderate level of demand, it is important to note that the percentage alone does not provide a complete picture of the market dynamics. A closer look at the number of renters versus homeowners can help clarify the situation. If the total housing units in the area are 1,000, then 538 units are rented out. This suggests a decent pool of potential tenants, but investors should also consider the competition from other rental properties and the overall economic health of the region to gauge the sustainability of rental demand.
Will vouchers keep pace with $955 market rents?
The market rent in Vermillion, SD is $955 per month. The question of whether vouchers will keep pace with these rents hinges on the availability and value of Housing Choice Vouchers (Section 8 vouchers) in the area. According to the data, the voucher amount is pegged at $930, which is slightly below the market rent. This discrepancy means that landlords may have to absorb the additional cost or seek non-voucher tenants willing to pay the higher rent. However, the data does not specify if there are adjustments made annually to the voucher amounts based on inflation or changes in the local market conditions. It is advisable for investors to monitor these trends closely.
In summary, while Vermillion, SD presents opportunities for rental investments, particularly through the Section 8 program, the data reveals some challenges that must be carefully managed. The FMR does not fully cover the mortgage on a typical home, indicating a need for supplemental income. Renter demand is moderate, suggesting a balanced but competitive market. Lastly, the discrepancy between voucher amounts and market rents requires attention to ensure profitability and sustainability of the investment.
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.