Location: Corson County, SD | Metro: Sioux County, ND
| Unit Size | Monthly FMR |
|---|---|
| Studio | $720 |
| 1 Bedroom | $790 |
| 2 Bedrooms | $1,030 |
| 3 Bedrooms | $1,390 |
| 4 Bedrooms | $1,560 |
| 5 Bedrooms | $1,810 |
| 6 Bedrooms | $2,027 |
| 7 Bedrooms | $2,189 |
| 8 Bedrooms | $2,298 |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 57642 is centered around the significant disparity between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2026, the FMR stands at $950, while the Census ACS data indicates an average market rent of $586. This creates a gap of $364, which represents approximately 62% of the market rent.
Given that the FMR exceeds the market rent, landlords and small-portfolio investors can leverage this situation to enhance their investment yields. Voucher tenants, who are subsidized by the government up to the FMR, offer a consistent and reliable source of rental income. In ZIP 57642, where 46.7% of residents are renters, and the median home value is $107,379, the presence of voucher tenants can stabilize cash flows, especially in a market with a median income of $58,750.
The higher guaranteed income from voucher tenants can offset the lower vacancy rates often associated with Section 8 properties. Additionally, it can provide a buffer against potential economic downturns, ensuring that rental income remains steady and predictable. This is particularly beneficial in areas with a high percentage of renters, as it ensures a steady demand for rental units.
However, accepting housing vouchers also comes with certain costs. Landlords must comply with HUD regulations, which can include regular inspections and maintenance requirements. Moreover, the administrative burden of managing voucher tenants can be higher compared to traditional market-rate rentals. Despite these challenges, the financial benefits of receiving a higher rent payment, closer to the FMR, outweigh the costs in many cases.
In summary, the $364 gap between the FMR and the market rent in ZIP 57642 presents a compelling opportunity for landlords and small-portfolio investors to increase their rental yields. The consistent income from voucher tenants, combined with the local demographic context, makes this a strategic investment choice.
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.