Location: Callaway County, MO | Metro: Columbia, MO HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $820 |
| 1 Bedroom | $910 |
| 2 Bedrooms | $1,110 |
| 3 Bedrooms | $1,480 |
| 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 65039 in Hartsburg, Missouri, provides valuable insights into potential investment opportunities. To begin, let's annualize the Fair Market Rent (FMR) and market rent figures for a two-bedroom property. The FMR for a 2BR in Hartsburg, MO, for FY 2024 is $870 per month, translating to an annual rental income of $10,440. In contrast, the Census ACS market rent figure stands at $671 per month, which annualizes to $8,052.
Given the median home value of $429,434, we can calculate the implied gross yield for both scenarios. For the FMR scenario, the gross yield is calculated as follows:
For the market rent scenario, the gross yield is:
The difference between these yields highlights the impact of rental subsidies on investment returns. At 2.43%, the FMR scenario offers a significantly higher gross yield compared to the 1.88% from market rents. However, the choice between these two scenarios must be made carefully considering several factors.
Hartsburg has a renter density of 3.6%, indicating a low percentage of the population that might be eligible for Section 8 housing assistance. This suggests that relying solely on FMR figures may overestimate the potential demand for subsidized rentals. Additionally, the N/A-day Days on Market (DOM) indicates incomplete data, which could affect the accuracy of the market rent estimate.
In conclusion, while the FMR scenario presents a more attractive gross yield, the low renter density and incomplete DOM data suggest that achieving this yield consistently may be challenging. Therefore, the market rent scenario, despite offering a lower gross yield, might be more realistic for long-term investment planning in this area.
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.