Location: Topeka, KS | Metro: Lawrence, KS MSA
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 | $970 |
| 1 Bedroom | $1,020 |
| 2 Bedrooms | $1,310 |
| 3 Bedrooms | $1,750 |
| 4 Bedrooms | $1,790 |
| 5 Bedrooms | $2,076 |
| 6 Bedrooms | $2,325 |
| 7 Bedrooms | $2,511 |
| 8 Bedrooms | $2,637 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,310 | $228,853 | 0.57% | F |
| 3BR | $1,750 | $299,041 | 0.59% | F |
| 4BR | $1,790 | $365,840 | 0.49% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 66542 (Tecumseh, KS) reveals two distinct scenarios based on the Federal Market Rent (FMR) and market rent figures. Using the annualized 2BR FMR of $960 for FY 2024, the implied gross yield is calculated as follows:
$960 x 12 months = $11,520 per year. Dividing this by the median home value of $300,044 yields an implied gross yield of approximately 3.84%. This calculation provides a baseline for what landlords can expect when participating in the Section 8 program.
In contrast, using the market rent figure of $1,118 per month, the implied gross yield is higher. $1,118 x 12 months = $13,416 per year. Dividing this by the median home value of $300,044 gives an implied gross yield of about 4.47%. This scenario reflects the potential income landlords might receive if they were to rent out properties at market rates without the constraints of the Section 8 program.
The difference between these two gross yields is significant, with the market rent scenario offering a roughly 0.63% higher yield compared to the Section 8 scenario. However, the choice between these two options should be made with consideration of the local rental market conditions.
Tecumseh, KS has a renter density of 14.1%, indicating that a relatively small portion of the population rents homes. This low density suggests that there may be limited demand for rental properties, particularly those participating in the Section 8 program. Given this context, the market rent scenario appears more realistic, as it aligns better with the actual rental rates observed in the area.
The N/A-day DOM (Days on Market) statistic indicates that there is insufficient data to determine how long properties typically remain on the market before being rented. This lack of information makes it challenging to predict vacancy rates, which would otherwise impact the net operating income (NOI) calculations. Despite this uncertainty, the higher gross yield from market rents offers a more attractive proposition for landlords and small-portfolio investors.
In conclusion, while the Section 8 program offers a guaranteed income stream at a gross yield of 3.84%, the market rent scenario provides a more substantial gross yield of 4.47%. Considering the low renter density and the limited data on vacancy rates, the market rent scenario is likely to be more beneficial for landlords in ZIP 66542.
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.