Location: Hamlin County, SD | Metro: Codington County, SD
| Unit Size | Monthly FMR |
|---|---|
| Studio | $870 |
| 1 Bedroom | $940 |
| 2 Bedrooms | $1,230 |
| 3 Bedrooms | $1,500 |
| 4 Bedrooms | $1,710 |
| 5 Bedrooms | $1,984 |
| 6 Bedrooms | $2,222 |
| 7 Bedrooms | $2,400 |
| 8 Bedrooms | $2,520 |
U.S. Census Bureau data (2024)
A decision tree for whether to buy in ZIP code 57201 for Section 8 purposes hinges on three key factors: Fair Market Rent (FMR), market rent compared to FMR, and rental demand. Let's break down each step:
1. Does the FMR of $1,080 cover the debt service on a property valued at $319,568?
Yes. The FMR of $1,080 per month is designed to ensure that a Section 8 tenant can cover the debt service, which includes mortgage payments, property taxes, insurance, and other expenses. Given the FMR, you would need to calculate the total monthly debt service for the property. If the total debt service is less than $1,080, then the answer is yes, and you can proceed to the next question.
No. If the total monthly debt service exceeds $1,080, the FMR does not sufficiently cover your costs. In this case, purchasing a property in ZIP 57201 for Section 8 would not be financially viable.
It Depends. This scenario arises if the total debt service is close to $1,080. You must assess additional factors such as maintenance costs, vacancy rates, and potential for rental increases to determine if the FMR will consistently cover your expenses over time.
2. Is the market rent ($1,000 ZORI) above, at, or below the FMR?
Above. If the market rent is higher than the FMR, you might consider renting to non-Section 8 tenants who can pay the higher rate. However, this means you cannot rely solely on Section 8 vouchers for occupancy. The market rent of $1,000 is below the FMR, so this branch does not apply.
At or Below. With the ZORI at $1,000, which is below the FMR, you can confidently expect to fill vacancies with Section 8 tenants without leaving money on the table. Proceed to the next question.
3. Are 31.5% of residents renters and the Days on Market (DOM) of 38 days sufficient to indicate strong demand?
Yes. A 31.5% rental rate suggests a significant portion of the population is looking for housing, and a DOM of 38 days indicates that properties are being rented relatively quickly. These figures suggest there is enough demand for rental properties, making ZIP 57201 a good investment for Section 8 properties.
No. If the rental rate were lower or the DOM significantly longer, it would signal weaker demand. However, the given figures support strong demand, so this branch does not apply.
It Depends. While the 31.5% rental rate and 38-day DOM suggest a healthy market, you should also consider the stability of the local economy, unemployment rates, and any major employers in the area. These factors can influence long-term demand.
In conclusion, based on the provided data, the FMR of $1,080 covers the debt service, the market rent is below the FMR, and the rental demand is strong. Therefore, a landlord should consider buying in ZIP 57201 for Section 8 investments.
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.