Location: Shelby County, IL | Metro: Montgomery County, IL
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 | $720 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $1,030 |
| 3 Bedrooms | $1,230 |
| 4 Bedrooms | $1,520 |
| 5 Bedrooms | $1,763 |
| 6 Bedrooms | $1,975 |
| 7 Bedrooms | $2,133 |
| 8 Bedrooms | $2,240 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,230 | $200,447 | 0.61% | D |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $970 in ZIP 62553 can adequately cover the mortgage on a home priced at $201,453. Given the median home price in the area is currently $123,163, a home valued at $201,453 is above the local average. To assess the viability, one must consider the typical mortgage rates and terms. Assuming a 30-year fixed-rate mortgage at an interest rate of 5%, the monthly payment for a $201,453 home would be approximately $1,080. This exceeds the FMR, indicating that additional income sources or higher rent prices might be necessary to ensure profitability.
The investor could also raise concerns about the low percentage of high equity homes, which stands at 72.24%. This figure suggests that while there is a significant portion of homes with more than 50% equity, nearly 28% of homes may have lower equity levels. However, the presence of 177 homes with over 50% equity indicates a stable market for potential investment opportunities.
Another objection might focus on the limited demand for rentals, indicated by the 5.4% rental rate. This low rate could suggest that the area is primarily owner-occupied, which might reduce the pool of potential tenants. Yet, it's important to note that the rental rate alone does not determine demand. Factors such as population growth, job availability, and the overall economic climate play crucial roles. Without specific data on these factors, it's challenging to definitively conclude the level of demand for rentals in ZIP 62553.
Lastly, the investor might wonder if the Housing Choice Voucher program will keep pace with the $850 market rents. The voucher program aims to subsidize rent for low-income families, but its ability to cover market rents depends on federal funding and adjustments. Current data does not specify whether the voucher amounts in ZIP 62553 are sufficient to meet the $850 market rent. Landlords should monitor updates from HUD to stay informed on any changes to voucher amounts.
In summary, while the FMR of $970 might not fully cover the mortgage on a $201,453 home, the presence of numerous high equity homes presents opportunities for savvy investors. The rental demand at 5.4% requires further analysis of local economic conditions to accurately gauge potential returns. Lastly, the adequacy of vouchers to cover $850 market rents remains uncertain without specific updates on HUD funding adjustments.
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.