Location: Champaign-Urbana, IL | Metro: Champaign-Urbana, IL HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,090 |
| 1 Bedroom | $1,100 |
| 2 Bedrooms | $1,300 |
| 3 Bedrooms | $1,630 |
| 4 Bedrooms | $1,710 |
| 5 Bedrooms | $1,984 |
| 6 Bedrooms | $2,222 |
| 7 Bedrooms | $2,400 |
| 8 Bedrooms | $2,520 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,630 | $246,659 | 0.66% | D |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 61877 is centered around the disparity between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR stands at $1050, while the Census ACS reports the market rent at $1094. This creates a gap of $44, which represents approximately 4.2% of the market rent. The fact that the FMR is lower than the market rent means that landlords accepting housing vouchers will be renting properties at rates below what the open market would command.
This situation presents a few challenges and considerations for landlords and small-portfolio investors. First, it's important to recognize that voucher tenants provide a stable source of income. The federal government guarantees payment up to the FMR, which in this case is $1050. However, the difference between the FMR and the market rent must be covered by the tenant's portion of the rent, which can sometimes lead to complications if the tenant's income is insufficient to meet the additional cost.
In ZIP 61877, where only 14.4% of residents are renters, the demand for rental properties might be relatively low compared to areas with higher percentages of renters. Additionally, with a median home value of $223,036 and a median income of $96,750, the financial landscape suggests that many residents can afford to purchase homes rather than rent. This further underscores the importance of understanding the dynamics of voucher tenants and the potential impact on investment yields.
To put the numbers into perspective, if a landlord has a property that could rent for $1094 in the open market but is receiving $1050 through a housing voucher, they are essentially foregoing $44 per month or $528 annually. Over the course of a year, this can add up to a significant loss in potential revenue. Therefore, the decision to participate in the Section 8 program should be carefully weighed against the benefits of a guaranteed tenant and the drawbacks of reduced rental income.
Investors should also consider the broader economic context. A median income of $96,750 suggests that residents have the capacity to contribute their share of the rent, but the percentage of renters being so low indicates a smaller pool of potential voucher tenants. Landlords must assess whether the stability offered by voucher programs outweighs the lower rents when compared to the open market.
In conclusion, the gap between the FMR and market rent in ZIP 61877 highlights the need for careful consideration of the risks and rewards associated with housing voucher tenants. While the FMR does not cover the full market rent, the financial guarantees and tenant stability can make this a strategic choice for certain investors looking to capitalize on yield plays in a challenging rental market environment.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.