Location: Codington County, SD | Metro: Clark County, SD
| Unit Size | Monthly FMR |
|---|---|
| Studio | $800 |
| 1 Bedroom | $940 |
| 2 Bedrooms | $1,140 |
| 3 Bedrooms | $1,380 |
| 4 Bedrooms | $1,660 |
| 5 Bedrooms | $1,926 |
| 6 Bedrooms | $2,157 |
| 7 Bedrooms | $2,330 |
| 8 Bedrooms | $2,447 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 57272 presents a clear picture when comparing the Federal Market Rent (FMR) and the market rent figures. The annualized FMR for a 2-bedroom apartment is set at $980 (for fiscal year 2026), while the Census ACS indicates a market rent of $584 per month.
To derive the implied gross yield, we first need to calculate the annual rents. For the FMR scenario, the annual rent would be $980 multiplied by 12, equating to $11,760. In contrast, the market rent annualizes to $584 multiplied by 12, resulting in $7,008.
Given that the median home value is not available for ZIP 57272, we must rely on other metrics to infer the likely gross yield. With a renter density of 60.4%, it suggests that there is a substantial portion of the population leasing properties, which could support higher rental rates. However, the lack of Days on Market (DOM) data leaves us without insight into how quickly properties are rented out, which is crucial for understanding the demand and vacancy rates.
In terms of gross yield, the FMR scenario of $11,760 annually provides a higher potential income compared to the market rent of $7,008. This implies that the gross yield based on the FMR would be significantly better for landlords and small-portfolio investors. However, the reality of achieving such high rents is questionable without knowing the specific property conditions and the local housing market dynamics.
Considering the 60.4% renter density, it's reasonable to assume that there is a steady demand for rentals. Yet, the actual gross yield will likely align closer to the market rent figure unless there are specific factors driving up the demand for Section 8 units in this area. Landlords should be cautious about relying solely on the FMR for their investment calculations, as it might not reflect the true market conditions.
Ultimately, the choice between using the FMR or market rent for calculating gross yield should be made after a thorough evaluation of the local real estate market and the specific characteristics of the properties in question. While the FMR offers a higher theoretical gross yield, the practical implications of securing tenants willing to pay these rates should be carefully considered.
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.