Location: Callaway County, MO | Metro: Callaway County, MO HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $840 |
| 1 Bedroom | $840 |
| 2 Bedrooms | $1,100 |
| 3 Bedrooms | $1,310 |
| 4 Bedrooms | $1,540 |
| 5 Bedrooms | $1,786 |
| 6 Bedrooms | $2,000 |
| 7 Bedrooms | $2,160 |
| 8 Bedrooms | $2,268 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,100 | $159,854 | 0.69% | D |
| 3BR | $1,310 | $248,041 | 0.53% | F |
| 4BR | $1,540 | $344,618 | 0.45% | F |
| 5BR | $1,786 | $402,371 | 0.44% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 65251, located in Fulton, Missouri, reveals some key insights into potential investment opportunities. For a two-bedroom property, the Fair Market Rent (FMR) set by HUD for fiscal year 2024 is $890 per month. This translates to an annual rental income of $10,680. The Zillow Observed Rental Index (ZORI), which reflects the market rent, stands at $1,111 per month, resulting in an annual rental income of $13,332.
To calculate the gross yield, we use the median home value of $246,368 as our investment basis. With the HUD FMR, the gross yield would be approximately 4.34%. This is derived from dividing the annual rental income ($10,680) by the median home value ($246,368). On the other hand, using the market rent figure from ZORI, the gross yield increases to about 5.41%, calculated by dividing the annual rental income ($13,332) by the median home value ($246,368).
Given that only 33.1% of the population in ZIP 65251 are renters, it's important to consider the demand for rental properties, including those participating in the Section 8 program. While the gross yield based on market rent appears more attractive, the reality of finding tenants willing to pay higher rates must be balanced against the availability of Section 8 vouchers. The N/A-day Days on Market (DOM) suggests either limited data or a quick turnover rate for rentals, which could indicate strong local demand or a unique market condition that needs further investigation.
In conclusion, the gross yield for a Section 8 property in ZIP 65251 is estimated at 4.34%, while the gross yield based on market rents is around 5.41%. Given the moderate renter density, the HUD FMR scenario might be more realistic for long-term investment stability, though investors should also consider the potential for securing higher-paying market tenants if the local rental market supports it.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.