Location: Kansas City, MO | Metro: Kansas City, MO-KS HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,410 |
| 1 Bedroom | $1,540 |
| 2 Bedrooms | $1,740 |
| 3 Bedrooms | $2,270 |
| 4 Bedrooms | $2,720 |
| 5 Bedrooms | $3,155 |
| 6 Bedrooms | $3,534 |
| 7 Bedrooms | $3,817 |
| 8 Bedrooms | $4,008 |
The analysis for ZIP code 66051 in Unknown, Missouri, provides a limited set of data points that are critical for understanding the potential returns from Section 8 properties versus market rents. The Fair Market Rent (FMR) for a two-bedroom apartment in ZIP 66051 for fiscal year 2024 is set at $1430 per month.
Given the annualization of this figure, the yearly rental income from a Section 8 tenant would be $17,160. However, the median home value and market rent figures are not available, making it challenging to provide a direct comparison with non-subsidized tenants. For the sake of this analysis, let's assume the market rent for a similar two-bedroom property is higher than the Section 8 rate, a common scenario in many areas.
The implied gross yield for a Section 8 property can be calculated using the annual rental income and the median home value. Since the median home value is not provided, we cannot calculate an exact cap rate. However, if we were to hypothetically assume a median home value, the formula would be: Gross Yield = Annual Rental Income / Median Home Value.
Without the market rent and median home value, it's impossible to state the exact gross yield for a market-rate property. But generally, market-rate properties offer higher yields compared to Section 8 properties due to the fixed nature of Section 8 rents. This makes the market-rate scenario more attractive for landlords seeking higher returns.
The lack of data on renter density and days on market (DOM) further complicates the analysis. Typically, a higher renter density and shorter DOM indicate a more favorable environment for rental properties, including those participating in the Section 8 program. Landlords should consider these factors when deciding whether to participate in Section 8 or pursue market-rate rentals.
In conclusion, while the Section 8 program guarantees a steady stream of tenants and income, the cap rate and gross yield are likely to be lower compared to market-rate rentals. Investors should weigh the benefits of guaranteed income against the potentially higher yields from market-rate properties.
Data Sources: FMR data from HUD (2027).
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.