Location: Champaign-Urbana, IL | Metro: Champaign-Urbana, IL HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,030 |
| 1 Bedroom | $1,040 |
| 2 Bedrooms | $1,230 |
| 3 Bedrooms | $1,550 |
| 4 Bedrooms | $1,620 |
| 5 Bedrooms | $1,879 |
| 6 Bedrooms | $2,104 |
| 7 Bedrooms | $2,272 |
| 8 Bedrooms | $2,386 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate for ZIP code 61815 reveals a challenging investment landscape due to the lack of specific data points such as the median home value and the days on market (DOM). However, we can still derive a rough picture based on the available information.
The Fair Market Rent (FMR) for a 2-bedroom apartment in ZIP 61815 for fiscal year 2024 is set at $930 per month. This translates to an annual rental income of $11,160 when considering a property under the Section 8 program. In contrast, the market rent for a similar property is $1,292 per month, resulting in an annual rental income of $15,504 based on Census ACS data.
To understand the gross yield, we need to compare these annual incomes to the median home value. Unfortunately, the median home value for ZIP 61815 is not available, which complicates the direct calculation of the gross yield. Nonetheless, we can infer that the gross yield under the Section 8 scenario would be lower than that of the market rent scenario, given the disparity in monthly rents.
The renter density in ZIP 61815 is 38.6%, indicating a moderate demand for rental properties. The days on market (DOM) being listed as N/A suggests either insufficient data or a relatively quick turnover for rentals, which could imply strong local demand despite the limited availability of homes for sale.
Given the higher market rent of $1,292 per month, it stands to reason that the gross yield for a property rented at market rates would be significantly higher than one rented through the Section 8 program. For instance, if we hypothetically assume a median home value of $200,000, the gross yield for a Section 8 property would be around 5.6%, while the market rent property would have a gross yield of approximately 7.8%. These figures clearly demonstrate that renting at market rates yields a better return on investment compared to Section 8.
However, the choice between market rent and Section 8 depends on the landlord's goals. While market rent offers a higher gross yield, Section 8 provides stable, government-backed income with less risk of vacancy. Given the 38.6% renter density, there is a reasonable chance that market rent properties can find tenants quickly, but the absence of DOM data makes it difficult to assess the speed of turnover accurately.
In conclusion, the gross yield comparison indicates that renting at market rates ($1,292 per month) is more financially advantageous than participating in the Section 8 program ($930 per month). Nevertheless, the decision should also consider the stability and administrative aspects associated with each option.
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.