Location: Lawrence County, SD | Metro: Rapid City, SD HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $830 |
| 1 Bedroom | $920 |
| 2 Bedrooms | $1,210 |
| 3 Bedrooms | $1,570 |
| 4 Bedrooms | $1,970 |
| 5 Bedrooms | $2,285 |
| 6 Bedrooms | $2,559 |
| 7 Bedrooms | $2,764 |
| 8 Bedrooms | $2,902 |
U.S. Census Bureau data (2024)
A landlord considering investing in ZIP code 57732 for Section 8 properties must evaluate several key factors:
1. Does the Fair Market Rent (FMR) of $920 cover the debt service on a $383,900 property?
If the annual debt service on a $383,900 property is less than or equal to $11,040 ($920 x 12 months), then the answer is yes. The FMR would sufficiently cover the mortgage payments.
If the annual debt service exceeds $11,040, then the answer is no. The FMR would not be enough to cover the mortgage payments.
2. How does the market rent of $775 compare to the FMR?
If the market rent is below the FMR, then landlords can potentially benefit from higher rents paid by the government, making the investment more attractive.
If the market rent is at or near the FMR, then the difference between market rent and FMR is minimal, and the investment's profitability is limited to the standard rental rates.
If the market rent significantly exceeds the FMR, then landlords might consider if the gap is too large, reducing the attractiveness of Section 8 investments in this area.
3. Is there sufficient demand with 37.8% of residents being renters and the days on market (DOM) status?
If the 37.8% of renters indicates a strong demand and the DOM is low, meaning properties sell quickly, then the answer is yes. There is enough demand to support a Section 8 investment.
If the DOM is high, indicating that properties take longer to sell or rent, then the answer is it depends. Landlords will need to assess the local vacancy rates and competition to determine if the demand is still viable.
If the percentage of renters is low and the DOM is high, then the answer is no. There is insufficient demand to justify a Section 8 investment in this ZIP code.
To conclude, a landlord should first ensure that the FMR of $920 is adequate to cover the debt service on a $383,900 property. Next, they must compare the FMR against the market rent of $775 to gauge potential profitability. Lastly, they need to assess the rental demand based on the 37.8% of residents who are renters and the DOM status. Only when all these criteria are met positively can a landlord proceed with confidence in purchasing a Section 8 property in ZIP code 57732.
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.