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 | $1,030 |
| 1 Bedroom | $1,060 |
| 2 Bedrooms | $1,300 |
| 3 Bedrooms | $1,670 |
| 4 Bedrooms | $1,920 |
| 5 Bedrooms | $2,227 |
| 6 Bedrooms | $2,494 |
| 7 Bedrooms | $2,694 |
| 8 Bedrooms | $2,829 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,300 | $43,086 | 3.02% | A+ |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 62205, located in East Saint Louis, IL, is centered around the discrepancy between the Fair Market Rent (FMR) and the actual market rent. The FMR for ZIP 62205 for fiscal year 2024 is set at $1140, whereas the Census ACS data indicates that the market rent is $1025. This creates a gap of $115, which represents an approximately 11.2% difference between the two figures.
In this scenario, where the FMR exceeds the market rent, it suggests that landlords who accept Section 8 housing vouchers can potentially achieve higher yields compared to renting properties at the open-market rate. The FMR is determined by HUD to ensure that rental payments cover the cost of decent, safe, and sanitary housing. For landlords in East Saint Louis, this means they could receive more stable and predictable income through voucher programs than they might by renting to non-voucher tenants at the lower market rate.
However, accepting Section 8 tenants also comes with its own set of challenges and considerations. The process involves compliance with HUD regulations, potential delays in payment processing, and the need to maintain property standards that meet government requirements. Additionally, the median home value in East Saint Louis is $36,323, and the median income is $45,672, indicating that the area faces significant economic challenges. These factors can influence the overall investment strategy and risk assessment for landlords.
To illustrate the financial impact, if a landlord rents out a property at the market rate of $1025, they would be leaving money on the table compared to the FMR of $1140. This gap can be significant when considering the number of units in a portfolio. For instance, a landlord with ten units would see an annual shortfall of $13,800 ($115 x 10 units x 12 months) if they do not participate in the Section 8 program. This makes voucher tenants a strategic choice for maximizing rental income.
Furthermore, the high percentage of renters in East Saint Louis—31.6%—indicates a strong demand for affordable housing. Landlords who leverage the Section 8 program can tap into this demand while ensuring a steady stream of income that aligns with the higher FMR. This approach can be particularly beneficial given the economic conditions and the need for stable housing solutions in the area.
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.