Location: St. Louis, MO | Metro: St. Louis, MO-IL HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $900 |
| 1 Bedroom | $950 |
| 2 Bedrooms | $1,160 |
| 3 Bedrooms | $1,490 |
| 4 Bedrooms | $1,710 |
| 5 Bedrooms | $1,984 |
| 6 Bedrooms | $2,222 |
| 7 Bedrooms | $2,400 |
| 8 Bedrooms | $2,520 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 63061 reveals two distinct outcomes based on the provided figures. For the first scenario, using the annualized Fair Market Rent (FMR) for a 2-bedroom apartment at $1320 (FY 2024), we can derive an implied gross yield. Given the median home value in the area is $298,867, the gross yield would be calculated as follows:
To find the gross yield, divide the annual rent by the property value: $1320 / $298,867 = 0.0044 or approximately 0.44%. This is the gross yield if you were to rent a 2-bedroom unit at the FMR rate.
In the second scenario, where the market rent is not available, we cannot directly calculate a gross yield without making assumptions. However, it's important to note that the lack of market rent data suggests either limited data or a unique rental market situation in ZIP 63061.
Given the renter density of 32.8%, it's reasonable to assume that there is a significant demand for rental properties, including those eligible for Section 8. However, the absence of a typical Days on Market (DOM) figure makes it challenging to assess how quickly properties might be leased under market conditions.
Comparing the two scenarios, the first one with the FMR rate provides a concrete gross yield figure, whereas the second scenario lacks sufficient data to draw a definitive conclusion. The 0.44% gross yield derived from the FMR is likely to be a conservative estimate, reflecting the government-subsidized nature of Section 8 rents. In a more robust market environment, where market rents are higher, the gross yield would naturally be greater, potentially aligning more closely with general investment expectations.
For landlords and small-portfolio investors considering Section 8 participation in ZIP 63061, the 0.44% gross yield should be seen as a baseline for calculating potential returns. While this figure may seem low, it must be weighed against the stability and security provided by the Section 8 program, particularly in light of the moderate renter density. Investors should also consider the implications of the unknown market rent and DOM data when making their investment decisions.
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.