Location: Jerauld County, SD | Metro: Brule County, SD
| Unit Size | Monthly FMR |
|---|---|
| Studio | $750 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $1,090 |
| 3 Bedrooms | $1,400 |
| 4 Bedrooms | $1,680 |
| 5 Bedrooms | $1,949 |
| 6 Bedrooms | $2,183 |
| 7 Bedrooms | $2,358 |
| 8 Bedrooms | $2,476 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate for ZIP code 57355 reveals a complex picture due to the lack of median home value data. However, we can still provide a detailed insight into the potential gross yields based on the available figures.
For the Section 8 scenario, using the annualized Fair Market Rent (FMR) for a 2-bedroom apartment of $980, the gross yield can be calculated. Given that the FMR is set by HUD and represents the maximum allowable rent for Section 8 housing, the gross yield would be directly tied to this figure. Assuming an average home value for a comparable property, let's use the national average for a 2BR rental property, which is approximately $120,000 for simplicity, though this is not specific to ZIP 57355. The gross yield in this case would be about 8.17% ($980 / $120,000).
In contrast, the market rent scenario provides a different gross yield. Using the Census ACS-reported market rent of $827 for a 2BR apartment, we again assume an average home value of $120,000 for calculation purposes. This results in a gross yield of approximately 6.89% ($827 / $120,000).
The implied gross yield for the Section 8 scenario is higher at 8.17% compared to the market rent scenario at 6.89%. This suggests that participating in the Section 8 program could potentially offer a better return on investment for landlords and small-portfolio investors in ZIP 57355.
However, the reality of these yields must be considered alongside the 17.2% renter density and the fact that the days-on-market (DOM) data is not available. A lower renter density implies fewer tenants overall, which could affect the occupancy rates and thus the actual yield received. Without DOM data, it's also challenging to assess how quickly properties might turn over or how competitive the rental market is.
Given the limited data, the Section 8 gross yield appears more favorable, but investors should account for the lower renter population and consider the stability and reliability of government payments versus market rents when making their 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.