Location: Champaign-Urbana, IL | Metro: Champaign-Urbana, IL HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,020 |
| 1 Bedroom | $1,040 |
| 2 Bedrooms | $1,220 |
| 3 Bedrooms | $1,530 |
| 4 Bedrooms | $1,600 |
| 5 Bedrooms | $1,856 |
| 6 Bedrooms | $2,079 |
| 7 Bedrooms | $2,245 |
| 8 Bedrooms | $2,357 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 61871 provides a clear picture of potential investment returns. The Fair Market Rent (FMR) for a two-bedroom apartment in this area, as set by HUD for FY 2024, is $1,000 per month. This translates to an annual rental income of $12,000 when considering a Section 8 lease. On the other hand, the market rent for a similar unit, based on Census ACS data, stands at $1,091 monthly, equating to an annual rental income of $13,092.
The median home value for ZIP 61871 is currently unavailable, making it difficult to calculate precise cap-rates. However, we can infer the gross yields for both scenarios. For the Section 8 scenario, assuming a property value of $150,000 (a common benchmark for small-portfolio investments), the gross yield would be approximately 8%. This calculation is derived from dividing the annual rental income ($12,000) by the property value ($150,000).
In the case of market rent, using the same property value benchmark, the gross yield increases to about 8.7%. This figure is calculated by dividing the annual market rent income ($13,092) by the property value ($150,000).
Given the 15.8% renter density in ZIP 61871, it's evident that there is a substantial demand for rental properties. However, the lack of specific data on median home values and days on market (DOM) makes it challenging to provide a definitive analysis. Despite this, the higher gross yield from market rents suggests a potentially better financial outcome for landlords willing to navigate the complexities of non-subsidized leases.
While Section 8 leases offer stability and a guaranteed tenant base due to the government subsidy, the slightly lower gross yield compared to market rents indicates that landlords might find greater profitability in the open market. Nevertheless, the decision should consider the local housing dynamics and the ease of finding tenants through Section 8 versus the competitive nature of market rents.
Investors should also take into account the additional administrative overhead associated with Section 8 properties, such as compliance with HUD regulations and potential delays in lease renewals. These factors could influence the net operating income (NOI) and overall investment strategy.
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.