Location: Mercer County, ND | Metro: Mercer County, ND
| Unit Size | Monthly FMR |
|---|---|
| Studio | $990 |
| 1 Bedroom | $1,000 |
| 2 Bedrooms | $1,310 |
| 3 Bedrooms | $1,720 |
| 4 Bedrooms | $1,720 |
| 5 Bedrooms | $1,995 |
| 6 Bedrooms | $2,234 |
| 7 Bedrooms | $2,413 |
| 8 Bedrooms | $2,534 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate for ZIP code 58580 reveals some key insights into the potential rental income and property values in this area. The Fair Market Rent (FMR) for a 2-bedroom apartment in this ZIP code, as set by HUD for fiscal year 2026, is $1,040 per month. This annualizes to $12,480 per year. In contrast, the market rent for a similar unit, according to the Census ACS data, is $1,275 per month, or $15,300 annually.
The median home value in ZIP 58580 is not available, which complicates the calculation of an exact cap rate. However, we can still derive the implied gross yield for both scenarios. Assuming a typical single-family home with two bedrooms, the gross yield based on the FMR would be approximately 10.06%, while the gross yield based on market rent would be about 12.49%. These figures are calculated by dividing the annual rental income by the property value, though the lack of a median home value means these yields are purely illustrative.
To determine which scenario is more realistic, consider the 13.1% renter density in ZIP 58580. This suggests that a significant portion of the population owns their homes, potentially limiting the pool of tenants who might qualify for Section 8 housing. Additionally, the days on market (DOM) figure is not available, which could indicate either a very strong or weak rental market, depending on other factors not reflected here. Without a specific DOM figure, it's challenging to gauge how quickly properties might be rented out under either scenario.
Given the low renter density, it's reasonable to assume that landlords might find it more difficult to attract tenants through the Section 8 program alone. Therefore, the gross yield based on market rent ($1,275 per month) is likely more reflective of what landlords can realistically expect. While the FMR provides a useful benchmark for subsidized housing, the actual rental income is often higher when relying on the broader rental market.
In conclusion, although the precise cap rate cannot be determined due to missing data on median home values and DOM, the gross yields suggest that landlords should aim for the higher market rent to maximize their returns. The 12.49% gross yield from market rents offers a clearer path to profitability than the 10.06% from FMRs, especially considering the limited number of renters in ZIP 58580.
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.