Location: Davenport-Moline-Rock Island, IA | Metro: Davenport-Moline-Rock Island, IA-IL MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $780 |
| 1 Bedroom | $840 |
| 2 Bedrooms | $1,040 |
| 3 Bedrooms | $1,370 |
| 4 Bedrooms | $1,670 |
| 5 Bedrooms | $1,937 |
| 6 Bedrooms | $2,169 |
| 7 Bedrooms | $2,343 |
| 8 Bedrooms | $2,460 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate for ZIP code 61486 reveals a stark contrast between government-subsidized rental income and market-driven rents. Using the Federal Market Rent (FMR) for a two-bedroom apartment set at $860 per month for fiscal year 2024, the annualized income comes to $10,320. Against the median home value of $163,066, this translates into an implied gross yield of approximately 6.3%. This calculation assumes that the property can be rented out at the FMR level year-round without vacancy.
In comparison, if we consider the market rent for a two-bedroom unit at $1,000 per month based on Census ACS data, the annualized income rises to $12,000. The implied gross yield in this scenario is about 7.4%, assuming similar occupancy rates as the first scenario. This higher yield reflects the potential benefits of renting outside the Section 8 program, where landlords might command higher rents.
Given the 9.8% renter density in ZIP 61486, it's important to note that the number of days on market (DOM) is listed as N/A, indicating a lack of available data on how quickly properties are rented. However, the low renter density suggests that there may be fewer potential renters overall, which could impact the speed at which a property is leased and the likelihood of maintaining full occupancy over time.
The gross yield of 6.3% under Section 8 is lower than the 7.4% yield from market rents, reflecting the trade-off between guaranteed income through government subsidies and potentially higher but riskier market-based rents. For landlords and small-portfolio investors, the choice between these options should consider not only the yield but also factors such as tenant stability, maintenance costs, and the administrative overhead associated with participating in the Section 8 program.
Investors should weigh the certainty of receiving the FMR payments against the possibility of achieving higher market rents, considering the local rental market dynamics and their tolerance for risk. In ZIP 61486, the reality of a lower renter population density might favor the stability offered by Section 8, despite the lower gross yield.
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.