Location: St. Louis, MO | Metro: St. Louis, MO-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 | $1,020 |
| 1 Bedroom | $1,060 |
| 2 Bedrooms | $1,290 |
| 3 Bedrooms | $1,660 |
| 4 Bedrooms | $1,910 |
| 5 Bedrooms | $2,216 |
| 6 Bedrooms | $2,482 |
| 7 Bedrooms | $2,681 |
| 8 Bedrooms | $2,815 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,290 | $97,935 | 1.32% | A |
| 3BR | $1,660 | $129,541 | 1.28% | A |
| 4BR | $1,910 | $108,132 | 1.77% | A+ |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 62018, Cottage Hills, IL, reveals a nuanced picture when comparing the Federal Market Rent (FMR) and market rent against the median home value.
The annualized 2BR FMR for FY 2024 in ZIP 62018 is $1060. Given the median home value of $107,996, this translates to an implied gross yield of approximately 11.87%. This calculation is based on the assumption that the property generates income equal to the FMR annually.
In contrast, the Census ACS reported market rent for a 2BR apartment in the same area is $1,052. Using this figure, the implied gross yield drops slightly to about 11.78%. The difference between these two yields is minimal, indicating that the FMR closely aligns with actual market conditions.
Considering the 33.0% renter density in Cottage Hills, it's evident that there is a substantial portion of the population who might be interested in renting through the Section 8 program. However, the N/A-day DOM (Days on Market) suggests that rental listings may not always remain vacant for long periods, implying a relatively strong demand for rentals.
The gross yield comparison shows that the FMR-based yield is marginally higher than the market rent-based yield. In reality, landlords should expect the market rent-based yield to be more accurate, as it reflects current tenant preferences and willingness to pay. The slight discrepancy between the FMR and market rent indicates that the government's rental assistance programs are effectively calibrated to the local housing market.
Investors must also consider other factors such as maintenance costs, vacancy rates, and the administrative overhead associated with participating in the Section 8 program. Despite these considerations, the consistent gross yield figures suggest that Section 8 properties can offer a stable, if modest, return on investment in Cottage Hills.
In summary, the gross yields derived from both the FMR and market rent indicate a similar level of profitability for Section 8 properties in ZIP 62018. The slightly lower market rent-based yield is likely more reflective of the true rental environment, making it a more realistic benchmark for potential returns.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.