Location: Lyman County, SD | Metro: Lyman County, SD
| Unit Size | Monthly FMR |
|---|---|
| Studio | $790 |
| 1 Bedroom | $870 |
| 2 Bedrooms | $1,140 |
| 3 Bedrooms | $1,360 |
| 4 Bedrooms | $1,800 |
| 5 Bedrooms | $2,088 |
| 6 Bedrooms | $2,339 |
| 7 Bedrooms | $2,526 |
| 8 Bedrooms | $2,652 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 57365 is based on the Fair Market Rent (FMR) and market rent figures available. For a two-bedroom property, the annualized FMR for fiscal year 2026 is set at $1,000 per month, while the Census ACS reports an average market rent of $883 per month.
To calculate the gross yield, we need to consider the monthly rents and annualize them. With an FMR of $1,000, the annual rental income would be $12,000. Similarly, the market rent of $883 translates to an annual rental income of $10,596. Since the median home value is not available, we cannot provide a precise cap rate calculation. However, we can infer that the gross yield under Section 8 would be higher compared to the market rent scenario.
The implied gross yield for the Section 8 scenario is derived from the higher monthly rent of $1,000. This means that if a landlord participates in the Section 8 program, they could potentially earn a higher return on investment due to the guaranteed rent payment and lower vacancy rates associated with the program. The gross yield in this case is based on the assumption that the property is valued at a level where the $12,000 annual income represents a significant portion of the potential rental income.
In contrast, the gross yield from the market rent of $883 is lower, at $10,596 annually. This figure reflects the actual market conditions and the typical rent that a landlord might receive from non-program tenants. Given the 20.5% renter density, it's clear that the majority of homeowners in ZIP 57365 do not rent out their properties, which suggests that the market for rental properties is relatively small. Without the median home value, it's challenging to determine the exact cap rate, but the gross yield comparison indicates a higher potential return under Section 8.
The days on market (DOM) data being N/A further complicates the analysis, as it would typically help us understand how quickly properties are rented. However, given the higher renter density among those who do rent, it's reasonable to assume that properties participating in the Section 8 program might have a quicker turnaround time, reducing the risk of vacancy and increasing the likelihood of consistent rental income.
In summary, the gross yield from the Section 8 program is $12,000 annually, while the market rent yields $10,596 annually. The higher gross yield under Section 8 makes it a more attractive option for landlords in ZIP 57365, especially considering the higher renter density and the potential for quicker rentals. This analysis provides a solid basis for small-portfolio investors looking to maximize their returns in this area.
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.