Location: Dent County, MO | Metro: Dent County, MO
| Unit Size | Monthly FMR |
|---|---|
| Studio | $740 |
| 1 Bedroom | $770 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,200 |
| 4 Bedrooms | $1,510 |
| 5 Bedrooms | $1,752 |
| 6 Bedrooms | $1,962 |
| 7 Bedrooms | $2,119 |
| 8 Bedrooms | $2,225 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 65501 provides a critical outlook for landlords and small-portfolio investors considering participation in the program. The Federal Market Rent (FMR) for a two-bedroom unit in fiscal year 2026 is set at $900 annually, which translates to a monthly rental income of $75 per unit under the Section 8 Housing Choice Voucher program.
To derive the gross yield, we need to consider the median home value in the area. However, the median home value for ZIP 65501 is not available, making it challenging to calculate an exact cap rate. In such cases, investors often use comparable zip codes or broader regional averages to estimate yields.
Assuming a median home value in the range of $200,000 to $250,000, which is typical for many suburban areas, the annualized Section 8 FMR of $900 would imply a gross yield of 0.45% to 0.56%. This calculation is based on the formula: Gross Yield = (Annual Rental Income / Property Value) * 100.
In contrast, the market rent for the area is also not available, which means we cannot provide a direct comparison between the Section 8 and market rents. However, if we were to assume a market rent that is higher than the Section 8 rate, say $1,200 annually for a two-bedroom unit, the gross yield would increase to 0.60% to 0.75% using the same median home value assumptions.
The implied gross yield under Section 8 is lower compared to what might be expected in the open market. Given the 9.3% renter density in ZIP 65501, it suggests a relatively low demand for rental properties, which could make it difficult to attract tenants outside of the Section 8 program. Additionally, the lack of data on days on market (DOM) indicates uncertainty about how quickly properties can be rented out, further complicating investment decisions.
Considering these factors, the scenario where a landlord relies solely on Section 8 vouchers for rental income is more realistic, given the limited market data and the specific rental environment in ZIP 65501. Investors should carefully evaluate the trade-offs between the stability of Section 8 payments and the potentially higher yields from market rentals, while also accounting for the challenges of finding tenants in a low-density rental market.
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.