Location: Fergus County, MT | Metro: Fergus County, MT
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,160 |
| 1 Bedroom | $1,180 |
| 2 Bedrooms | $1,520 |
| 3 Bedrooms | $2,100 |
| 4 Bedrooms | $2,460 |
| 5 Bedrooms | $2,854 |
| 6 Bedrooms | $3,196 |
| 7 Bedrooms | $3,452 |
| 8 Bedrooms | $3,625 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 59489 reveals a distinct difference between using the Federal Market Rent (FMR) and the actual market rent figures. For a two-bedroom unit, the annualized FMR for FY 2026 stands at $1,400 per month, while the Census ACS reports a market rent of $543 per month.
Using the FMR of $1,400 per month, the annual rental income would be $16,800. Given the median home value of $353,855, this translates into an implied gross yield of approximately 4.75%. This calculation suggests that landlords participating in the Section 8 program could expect a significant portion of their investment to be covered annually by rental income.
On the other hand, when considering the market rent of $543 per month, the annual rental income drops to $6,516. With the same median home value of $353,855, the implied gross yield under this scenario is only about 1.84%. This stark contrast highlights the financial disparity between receiving FMR and market rates.
The 20.2% renter density in ZIP 59489 indicates a relatively low proportion of renters compared to homeowners, which might suggest a tighter rental market. However, the absence of days on market (DOM) data makes it challenging to assess how quickly units might turn over or how competitive the rental landscape is.
Given the available data, the FMR scenario presents a more favorable gross yield for landlords willing to participate in the Section 8 program. The higher yield of 4.75% versus the 1.84% from market rents offers a clearer path to covering mortgage payments, property taxes, insurance, and maintenance costs. While the FMR scenario is more attractive, it's important to note that landlords must qualify for and agree to participate in the Section 8 program to achieve this yield.
In conclusion, the FMR of $1,400 per month provides a significantly better gross yield for landlords in ZIP 59489, making it a more realistic scenario for those interested in maximizing returns through the Section 8 program. Small-portfolio investors should carefully weigh the benefits of higher yields against the administrative requirements and potential challenges associated with the program.
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.