Location: McPherson County, SD | Metro: Brown County, SD
| Unit Size | Monthly FMR |
|---|---|
| Studio | $790 |
| 1 Bedroom | $870 |
| 2 Bedrooms | $1,130 |
| 3 Bedrooms | $1,450 |
| 4 Bedrooms | $1,740 |
| 5 Bedrooms | $2,018 |
| 6 Bedrooms | $2,260 |
| 7 Bedrooms | $2,441 |
| 8 Bedrooms | $2,563 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate picture for ZIP code 57481 reveals two distinct scenarios based on the available data.
In the first scenario, using the annualized Fair Market Rent (FMR) for a 2-bedroom apartment at $1,080 per month, the annual rental income would be $12,960. Given the median home value is not available, we cannot calculate an exact cap rate. However, the implied gross yield can be estimated if we assume a median home value. For instance, if the median home value were hypothetically $200,000, the gross yield would be 6.48%. This figure is derived by dividing the annual rental income by the property value. It's important to note that this calculation is purely illustrative due to the lack of specific property value data.
In the second scenario, where market rent is not available, it's challenging to provide a direct comparison. The absence of market rent data suggests that there might be limited information on the local rental market dynamics. Without a comparative market rent, we cannot determine whether the Section 8 rent represents a below-market or above-market rate, which is critical for understanding the gross yield relative to what landlords could potentially earn from non-subsidized tenants.
The renter density of 5.0% in ZIP 57481 indicates a relatively low demand for rental properties, including those under the Section 8 program. This low density could affect the ability to quickly fill vacancies and maintain occupancy rates. The Days on Market (DOM) figure being not available also adds uncertainty; typically, a higher DOM would suggest a slower rental market, which could further impact the viability of Section 8 properties as investments.
Given these constraints, the first scenario with the annualized FMR provides a clearer picture. Assuming a median home value of $200,000, the gross yield of 6.48% offers a tangible benchmark. However, without market rent data, it's difficult to ascertain how competitive this yield is compared to the broader rental market. Therefore, while the gross yield based on FMR is a useful starting point, the actual performance of Section 8 properties in ZIP 57481 may vary significantly depending on the local rental market conditions and the speed at which units can be leased.
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.