Section 8 Fair Market Rent (FMR) for ZIP 58788 - 2027

FY 2027 Fair Market Rent Rates

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

In evaluating whether to purchase property in ZIP code 58788 for Section 8 investment, follow this decision tree:

1) Debt Service Coverage Ratio (DSCR) Analysis:

• Yes: The Fair Market Rent (FMR) of $1,040 for the metro area in fiscal year 2026 can cover the debt service on a property valued at $135,864. This implies that the rental income is sufficient to meet the mortgage payments and other expenses associated with the property.
• No: If the debt service exceeds what can be covered by the FMR of $1,040, then purchasing in ZIP 58788 is not advisable. It would result in a negative cash flow situation.
• It Depends: If the DSCR is marginal, further analysis is required to determine if there are additional sources of income or subsidies that could improve the financial viability of the investment.

2) Market Rent vs. FMR:

• Above: If the market rent of $450 (from Census ACS) is significantly below the FMR of $1,040, this suggests potential upside when securing Section 8 tenants. Landlords can expect higher rents from non-Section 8 tenants or can leverage the difference between market rent and FMR to improve profitability.
• At: If the market rent equals the FMR, there is no immediate advantage in terms of rental rates. However, the stability of Section 8 contracts can still make this an attractive option.
• Below: If the market rent is below the FMR but not substantially so, landlords should consider the potential for increased rental income with Section 8 tenants. However, if the gap is too wide, it might indicate a weak local rental market.

3) Rental Demand Analysis:

• Yes: With 22.1% of the population being renters, and assuming that the days on market (DOM) is favorable, there is enough demand to support a Section 8 investment. The percentage of renters indicates a steady pool of potential tenants.
• No: If the DOM is excessively high, it suggests difficulty in renting out properties, which would negatively impact the investment's performance. A high DOM indicates a lack of demand or issues with the property attracting tenants.
• It Depends: If the DOM data is unavailable or inconsistent, landlords must investigate further to understand the rental dynamics. High renter percentages alone do not guarantee easy tenancy; factors such as competition, property condition, and location also play crucial roles.

To conclude, a landlord considering a Section 8 investment in ZIP 58788 should first ensure that the FMR of $1,040 can cover the debt service on a $135,864 property. Next, assess the market rent against the FMR to gauge potential rental income. Finally, evaluate the rental demand based on the 22.1% of renters and the DOM. Following these steps will provide a clear path to making an informed decision.

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.