Location: St. Louis, MO | Metro: St. Louis, MO-IL HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,180 |
| 1 Bedroom | $1,230 |
| 2 Bedrooms | $1,500 |
| 3 Bedrooms | $1,920 |
| 4 Bedrooms | $2,220 |
| 5 Bedrooms | $2,575 |
| 6 Bedrooms | $2,884 |
| 7 Bedrooms | $3,115 |
| 8 Bedrooms | $3,271 |
U.S. Census Bureau data (2024)
To determine if a landlord should buy in ZIP code 62026 for Section 8 purposes, follow this decision tree:
Step 1: Debt Service Coverage Ratio (DSCR)
The Fair Market Rent (FMR) for ZIP 62026 in fiscal year 2024 is $1110. To assess if this FMR clears debt service on a property, calculate your DSCR. A DSCR of at least 1.0 is generally required to ensure that rental income covers all operating expenses and debt payments. If the $1110 FMR does not provide a DSCR of at least 1.0, the answer is No. If it does, proceed to Step 2.
Step 2: Market Rent Comparison
Compare the FMR of $1110 to the average market rent in the area. If the market rent is significantly higher than the FMR, landlords may find it challenging to attract tenants willing to pay the lower Section 8 rate. If market rent is above $1110, the answer is No. If it is at or below $1110, proceed to Step 3.
Step 3: Demand Analysis
Analyze the percentage of renters and the days on market (DOM) in ZIP 62026. If the percentage of renters is high and the DOM is low, there is sufficient demand for rental properties. For instance, if there is a 70% rental rate and an average DOM of 30 days, the answer is Yes. If the rental rate is low and the DOM is high, indicating weak demand, the answer is No. If the demand is moderate, with a rental rate around 50% and a DOM around 60 days, the answer is It Depends.
Conclusion
The decision to invest in ZIP 62026 for Section 8 properties hinges on these three factors. Ensure that the FMR of $1110 can cover your debt service, that market rents align with or are below this figure, and that there is adequate tenant demand. These criteria will guide you towards a sound investment decision.
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.