Location: St. Louis, MO | Metro: St. Louis, MO-IL HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $760 |
| 1 Bedroom | $790 |
| 2 Bedrooms | $960 |
| 3 Bedrooms | $1,230 |
| 4 Bedrooms | $1,420 |
| 5 Bedrooms | $1,647 |
| 6 Bedrooms | $1,845 |
| 7 Bedrooms | $1,993 |
| 8 Bedrooms | $2,093 |
The analysis of the Section 8 cap rate scenario for ZIP code 62070 in Missouri requires a closer look at the provided data points. The Fair Market Rent (FMR) for a two-bedroom apartment in fiscal year 2024 is set at $930 annually. However, the market rent is not available, nor is the median home value, which makes it challenging to provide a comprehensive cap rate analysis.
In the case where we use the FMR of $930 annually, the implied gross yield can be calculated based on the typical assumptions used in real estate analysis. For instance, if an investor were to purchase a property for $100,000, the annualized rental income would be $930. This translates to a gross yield of 0.93%, which is quite low and generally not attractive for most investors looking for higher returns on investment.
Without the market rent data, it's impossible to provide an accurate comparison to the FMR-based gross yield. Typically, market rents should exceed FMRs to reflect the actual demand and supply dynamics in the local housing market. If the market rent were known and significantly higher than $930, it would imply a better gross yield and potentially a more favorable investment opportunity.
The lack of specific renter density and Days on Market (DOM) figures also hinders a precise assessment of the investment climate in ZIP 62070. These metrics are crucial for understanding how quickly properties might be leased and the proportion of tenants who are likely to be interested in Section 8 housing assistance. In general, a higher renter density and lower DOM suggest a more active rental market, which could support higher rental rates and thus better gross yields.
To summarize, using the FMR of $930 annually for a two-bedroom unit implies a gross yield of 0.93% for a $100,000 investment. This is not a compelling figure for most investors. The absence of market rent data means that a direct comparison cannot be made, but it is reasonable to assume that the market rent would offer a better gross yield. The investment scenario in ZIP 62070 appears less favorable without additional data on median home values, renter density, and DOM.
Data Sources: FMR data from HUD (2027).
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.