Location: Davenport-Moline-Rock Island, IA | Metro: Davenport-Moline-Rock Island, IA-IL MSA
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $840 |
| 1 Bedroom | $910 |
| 2 Bedrooms | $1,130 |
| 3 Bedrooms | $1,490 |
| 4 Bedrooms | $1,820 |
| 5 Bedrooms | $2,111 |
| 6 Bedrooms | $2,364 |
| 7 Bedrooms | $2,553 |
| 8 Bedrooms | $2,681 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,490 | $159,796 | 0.93% | C |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 61238 reveals an interesting scenario when comparing federal market rent (FMR) to the actual market rent. The annualized 2BR FMR for fiscal year 2024 in ZIP 61238 is set at $1020, while the Census ACS reports the market rent at $971 per month. To understand the implications for investment, let's calculate the gross yields for both scenarios.
First, using the FMR of $1020 per month, the annual rental income would be $12,240. Given the median home value of $157,269 in the area, this translates into an implied gross yield of approximately 7.8%. On the other hand, if we consider the market rent of $971 per month, the annual rental income drops to $11,652, resulting in an implied gross yield of about 7.4%.
The difference between these two yields is significant for investors looking to maximize returns. However, the choice between these rates should be guided by the realities of the local rental market. In ZIP 61238, the renter density stands at 13.9%, indicating a relatively low proportion of renters in the population. This suggests that the market rent might be more reflective of the actual demand and willingness to pay, making the 7.4% gross yield scenario more realistic.
Furthermore, the lack of data on days on market (DOM) for the area means there is uncertainty regarding how quickly properties can be rented out. In a market with low renter density, landlords might face challenges in finding tenants willing to pay the higher FMR rate, especially if the property takes longer to rent. Therefore, while the FMR offers a higher potential gross yield, the market rent is likely to provide a more stable and predictable income stream.
In conclusion, for ZIP 61238, the gross yield based on market rent is more practical for investors, despite the slightly lower return compared to the FMR-based yield. This aligns with the observed renter density and provides a clearer picture of what landlords can realistically expect from their investments in this area.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.