Location: Ste. Genevieve County, MO | Metro: St. Louis, MO-IL HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $800 |
| 1 Bedroom | $890 |
| 2 Bedrooms | $1,060 |
| 3 Bedrooms | $1,320 |
| 4 Bedrooms | $1,680 |
| 5 Bedrooms | $1,949 |
| 6 Bedrooms | $2,183 |
| 7 Bedrooms | $2,358 |
| 8 Bedrooms | $2,476 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 63627 reveals some interesting insights into potential investment opportunities. Based on the Fair Market Rent (FMR) for a 2-bedroom apartment set at $1070 annually for fiscal year 2024, the implied gross yield for a property participating in the Section 8 program can be calculated. With a median home value of $299,635, the annualized FMR of $1070 translates to an implied gross yield of approximately 0.36%. This calculation is derived by dividing the annual FMR by the median home value.
In contrast, using the market rent figure of $548 (from the Census ACS), the implied gross yield drops significantly lower. The annualized market rent of $548 results in an implied gross yield of roughly 0.18%. This is achieved by multiplying the monthly market rent by 12 months and then dividing by the median home value.
The stark difference between these two yields highlights the disparity between Section 8 rental rates and market rents. Given that only 6.1% of residents in ZIP 63627 are renters, it suggests that the demand for rental properties, including those under the Section 8 program, is relatively low. This low density of renters might make it challenging to find tenants willing to pay the FMR rate, thus making the lower gross yield scenario based on market rent more realistic.
While the Section 8 program offers stability through government-backed payments, the gross yield based on the FMR is considerably higher than what the market currently supports. However, the difficulty in attracting tenants at the FMR rate could mean that landlords may struggle to maintain occupancy at the higher yield. Therefore, investors should consider the balance between yield and occupancy risk when evaluating properties in ZIP 63627 for Section 8 participation.
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.