Location: Peoria, IL | Metro: Peoria, IL MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $720 |
| 1 Bedroom | $770 |
| 2 Bedrooms | $980 |
| 3 Bedrooms | $1,280 |
| 4 Bedrooms | $1,430 |
| 5 Bedrooms | $1,659 |
| 6 Bedrooms | $1,858 |
| 7 Bedrooms | $2,007 |
| 8 Bedrooms | $2,107 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 61539 provides insight into the potential returns for landlords and small-portfolio investors considering participation in the program. The Fair Market Rent (FMR) for a 2-bedroom apartment in this ZIP code for FY 2024 is set at $830 per month, while the market rent, according to the Census ACS, is slightly higher at $838 per month.
To derive the gross yield, we must first annualize these figures. The annualized FMR for a 2BR unit is $9,960 ($830 x 12), and the annualized market rent is $10,056 ($838 x 12).
Given that the median home value is not available, we cannot calculate a precise cap rate. However, we can still make a comparison based on the gross yields derived from the monthly rents. For a property rented through Section 8 at the FMR, the annual income would be $9,960, whereas renting at the market rate would generate $10,056 annually.
This comparison indicates that the gross yield from renting at the market rate is marginally higher than renting under Section 8. However, it's important to consider the broader context. With only 19.4% of the population being renters, competition for tenants is likely lower, which could stabilize occupancy rates and reduce turnover costs associated with market-rate rentals.
The Days on Market (DOM) figure is also not available, making it difficult to assess how quickly properties might be rented out. In light of this, the Section 8 program offers a more predictable income stream, which can be advantageous for investors seeking steady cash flow over potentially higher yields from market-rate rentals.
In conclusion, while the market-rate rental scenario offers a slightly higher gross yield, the stability provided by the Section 8 program, coupled with the relatively low renter density, makes the latter a more realistic and attractive option for many investors. The choice ultimately depends on individual investment goals and risk tolerance.
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.