Location: Montgomery County, MO | Metro: St. Louis, MO-IL HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $740 |
| 1 Bedroom | $750 |
| 2 Bedrooms | $960 |
| 3 Bedrooms | $1,310 |
| 4 Bedrooms | $1,410 |
| 5 Bedrooms | $1,636 |
| 6 Bedrooms | $1,832 |
| 7 Bedrooms | $1,979 |
| 8 Bedrooms | $2,078 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 63351 provides insight into potential investment returns for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a two-bedroom apartment in ZIP 63351 for FY 2024 is set at $900 per month, while the market rent based on Census ACS data stands at $912 per month. These figures can be used to calculate the gross yield when compared to the median home value of $280,311.
Using the FMR of $900, the annualized rent would be $10,800. This translates to an implied gross yield of approximately 3.85%. The calculation is straightforward: divide the annual rent by the median home value ($10,800 / $280,311 = 0.0385).
On the other hand, using the market rent figure of $912, the annualized rent increases slightly to $10,944. This results in an implied gross yield of about 3.90% ($10,944 / $280,311 = 0.0390).
The difference between these yields is minimal, less than half a percent. However, given the renter density of 33.1%, it's important to note that a significant portion of the population in ZIP 63351 does not rent. This factor could influence the demand for rental properties and the likelihood of securing long-term Section 8 tenants. Additionally, the lack of data on days on market (DOM) means we cannot assess how quickly properties are rented out, which is crucial for understanding cash flow stability.
In conclusion, the gross yield under both the FMR and market rent scenarios is relatively low, suggesting that investments in ZIP 63351 may not offer high returns purely based on rental income. Landlords and investors should consider additional factors such as property management costs, vacancy rates, and local economic trends before making decisions. The slight edge in yield under the market rent scenario makes it the more realistic benchmark for potential returns, though the actual net operating income (NOI) will depend on individual property conditions and investor strategies.
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.