Location: McDonough County, IL | Metro: Hancock County, IL
| Unit Size | Monthly FMR |
|---|---|
| Studio | $720 |
| 1 Bedroom | $790 |
| 2 Bedrooms | $1,030 |
| 3 Bedrooms | $1,310 |
| 4 Bedrooms | $1,710 |
| 5 Bedrooms | $1,984 |
| 6 Bedrooms | $2,222 |
| 7 Bedrooms | $2,400 |
| 8 Bedrooms | $2,520 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 61420 provides a clear picture of the financial viability for landlords and small-portfolio investors. To start, we must annualize the Fair Market Rent (FMR) and the market rent for a two-bedroom property. The FMR for a 2BR in ZIP 61420 is set at $970 per month for FY 2026, translating to an annual rent of $11,640. Meanwhile, the market rent stands at $1,021 per month, equating to an annual rent of $12,252.
Given the median home value in ZIP 61420 is $88,097, we can calculate the implied gross yield for both scenarios. For the Section 8 scenario, using the FMR, the gross yield would be approximately 13.21%. This is derived from dividing the annualized FMR ($11,640) by the median home value ($88,097). In contrast, the market rent scenario yields a gross return of about 13.91%, calculated by dividing the annualized market rent ($12,252) by the median home value ($88,097).
The gross-yield comparison between the two scenarios is minimal, with the market rent providing a slightly higher return. However, it's important to consider the broader context when determining which scenario is more realistic. ZIP 61420 has a renter density of 15.9%, indicating that a significant portion of the population owns homes rather than renting. This lower rental demand could impact the ability to consistently lease properties at market rates, making the Section 8 option a more stable income source for landlords.
The Days on Market (DOM) figure is not available, which could provide additional insight into how quickly rental units are typically leased in this area. Despite this, the slightly higher gross yield from market rents does not necessarily outweigh the benefits of guaranteed Section 8 payments, especially considering the potential challenges in maintaining occupancy at market rates.
In summary, while the market rent offers a marginally higher gross yield of 13.91% compared to the Section 8 FMR yield of 13.21%, the stability and security of Section 8 payments might be more appealing to landlords in ZIP 61420, given the relatively low renter density. Investors should carefully weigh these factors when deciding whether to participate in the Section 8 program or pursue market-rate rentals.
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.