Section 8 Fair Market Rent (FMR) for ZIP 63863 - 2027

FY 2027 Fair Market Rent Rates

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

To determine if a landlord should invest in ZIP code 63863 for Section 8 properties, follow this decision tree:

1) Does the Fair Market Rent (FMR) of $950 cover the debt service on a property valued at $86,756?

• Yes: The FMR of $950 exceeds the expected debt service for a property priced at $86,756. This means that the rental income is sufficient to meet mortgage payments and other financial obligations.
• No: The FMR of $950 does not cover the debt service on a property valued at $86,756. Investing here would result in financial losses unless there are significant tax benefits or subsidies that offset the shortfall.
• It depends: If the landlord has a lower-cost financing option or the property is already paid off, then the FMR might be adequate even without covering the standard debt service. However, this scenario requires a detailed financial analysis.

2) How does the market rent of $669 compare to the FMR?

• Above FMR: If the market rent were above $950, it would indicate strong demand and potentially higher profits, but this is not the case for ZIP 63863.
• At FMR: If the market rent equaled $950, it would suggest a balanced market where Section 8 rents align with what tenants can afford. However, the market rent is below the FMR.
• Below FMR: The market rent of $669 is below the FMR of $950. This suggests that while Section 8 tenants can afford higher rents, the local market may not support these rates. Landlords should consider the possibility of renting to non-Section 8 tenants or adjusting their expectations for rental income.

3) Is there enough demand with 44.9% renters and an unknown number of days on the market (DOM)?

• Yes: With 44.9% of the population renting, there is a reasonable level of demand. However, the lack of data on days on the market makes it difficult to assess how quickly properties are leased. If the landlord can secure a steady stream of Section 8 tenants, the investment could be viable despite the lower market rent.
• No: If the unknown DOM indicates a slow leasing process, the landlord may struggle to fill vacancies and maintain consistent cash flow. This, combined with the market rent being below the FMR, could make the investment unattractive.
• It depends: The decision hinges on the landlord's ability to manage a property effectively and attract Section 8 tenants. Additionally, understanding the local real estate market dynamics and competition levels will provide a clearer picture. If the landlord can navigate these challenges, the investment in ZIP 63863 could still be worthwhile.

In conclusion, the viability of purchasing a property in ZIP 63863 for Section 8 tenants depends on the landlord's financial situation, market conditions, and management capabilities. The FMR provides a buffer over the market rent, which is beneficial, but the unknown DOM presents a risk. A thorough assessment of these factors is necessary before making an investment decision.

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.