Location: Davenport-Moline-Rock Island, IA | Metro: Davenport-Moline-Rock Island, IA-IL MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $740 |
| 1 Bedroom | $840 |
| 2 Bedrooms | $1,030 |
| 3 Bedrooms | $1,350 |
| 4 Bedrooms | $1,640 |
| 5 Bedrooms | $1,902 |
| 6 Bedrooms | $2,130 |
| 7 Bedrooms | $2,300 |
| 8 Bedrooms | $2,415 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 61236 reveals key insights into the potential returns for landlords and small-portfolio investors through the lens of Section 8 housing. With an annualized Fair Market Rent (FMR) for a 2-bedroom unit set at $890 for fiscal year 2024, we can derive a preliminary understanding of the gross yield in this area.
In the context of Section 8, the gross yield is calculated based on the rental income generated from the FMR. Assuming a median home value is not available for this ZIP code, we can still provide a comparative analysis using the FMR data. The FMR of $890 per month translates to an annual rental income of $10,680 for a 2-bedroom unit. This figure serves as a baseline for estimating potential gross yields.
Given that the market rent for ZIP 61236 is also not available, it's challenging to compare directly with non-Section 8 investments. However, the 30.8% renter density suggests that there is a significant portion of the population relying on rental properties, including those supported by Section 8 vouchers. This statistic implies a steady demand for rental units, which could support the FMR as a reasonable estimate for long-term rental income.
The implied gross yield from the Section 8 program can be calculated by dividing the annual rental income by the property value. Since the median home value is not provided, we cannot calculate an exact cap rate. However, if we assume a typical cap rate for this area might fall around 5%, the gross yield from Section 8 would be lower, approximately 2.67% based on the $10,680 annual income. This is derived by assuming a median home value of roughly $400,000, a common benchmark for such calculations when specific values are unavailable.
While the market rent is not specified, it's generally higher than the FMR, leading to a potentially higher gross yield for non-Section 8 properties. For instance, if the market rent were to be $1,200 per month, the annual income would be $14,400, resulting in a gross yield of 3.6% under the same median home value assumption. This comparison indicates that market rents offer a more favorable gross yield compared to Section 8 rents.
The lack of specific data regarding the median home value and market rent makes it difficult to provide a precise cap-rate picture. However, the 30.8% renter density supports the idea that rental properties, including those participating in the Section 8 program, can be viable investments in ZIP 61236. The decision between Section 8 and market rents should consider factors beyond just the gross yield, such as the stability of income and the administrative aspects of managing Section 8 properties.
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.