Location: Hamilton County, IL | Metro: Hamilton County, IL
| Unit Size | Monthly FMR |
|---|---|
| Studio | $830 |
| 1 Bedroom | $1,020 |
| 2 Bedrooms | $1,190 |
| 3 Bedrooms | $1,650 |
| 4 Bedrooms | $1,720 |
| 5 Bedrooms | $1,995 |
| 6 Bedrooms | $2,234 |
| 7 Bedrooms | $2,413 |
| 8 Bedrooms | $2,534 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 62817 reveals a challenging investment landscape due to the lack of median home value data, which is essential for calculating precise cap rates. However, we can still derive a rough picture using the available figures.
The Fair Market Rent (FMR) for a 2-bedroom apartment in ZIP 62817 is set at $1,120 per month for fiscal year 2026, based on metro area standards. This translates into an annualized FMR of $13,440. Meanwhile, the Census ACS reports the market rent for a 2-bedroom unit at $906 per month, resulting in an annualized market rent of $10,872.
To determine the implied gross yield, we need to consider the monthly rent figures relative to the potential purchase price of a property. Assuming a typical house price in the absence of median home value data, let's use the average price of a 2-bedroom home in similar areas, say $150,000, for illustrative purposes. The implied gross yield for the Section 8 scenario would be approximately 9%, calculated as $13,440 divided by $150,000. For the market rent scenario, the gross yield would be about 7.2%, calculated as $10,872 divided by $150,000.
Given the 16.7% renter density in ZIP 62817, it is important to note that the rental market is relatively small compared to owner-occupied homes. This factor can influence the demand for rental properties, including those under the Section 8 program. Additionally, the Days on Market (DOM) figure being N/A suggests either insufficient data or a low turnover rate, which could indicate stability in the housing market but also poses challenges in estimating vacancy rates and turnover costs.
The higher implied gross yield of 9% under the Section 8 scenario makes it appear more attractive on paper. However, the reality of managing a Section 8 property includes additional administrative burdens and restrictions that can affect the net operating income (NOI). Therefore, while the gross yield comparison favors Section 8, the actual performance must account for these factors.
In conclusion, despite the higher gross yield suggested by the FMR, the limited data on median home values and the N/A DOM figure complicate a definitive recommendation. Landlords and small-portfolio investors should carefully weigh the benefits of potentially higher yields against the operational challenges associated with Section 8 properties.
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.