Location: Bourbon County, KS | Metro: Allen County, KS
| Unit Size | Monthly FMR |
|---|---|
| Studio | $730 |
| 1 Bedroom | $810 |
| 2 Bedrooms | $960 |
| 3 Bedrooms | $1,220 |
| 4 Bedrooms | $1,440 |
| 5 Bedrooms | $1,670 |
| 6 Bedrooms | $1,870 |
| 7 Bedrooms | $2,020 |
| 8 Bedrooms | $2,121 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 66716 focuses on the potential rental income for 2-bedroom units under Section 8 versus market rents. The Fair Market Rent (FMR) for a 2-bedroom unit in ZIP 66716 for fiscal year 2024 is set at $1050 per month. When annualized, this translates to an annual rent of $12,600. In contrast, the market rent for a similar unit, based on Census ACS data, stands at $818 per month, equating to an annual rent of $9,816.
To derive the gross yield, we need the median home value. However, the data for ZIP 66716 indicates that the median home value is not available (N/A). Without this figure, we cannot calculate a precise cap rate. But let's consider the implications of these two rent scenarios.
In ZIP 66716, the renter density is 15.2%, suggesting a moderate level of rental activity. Given the lack of data on days on market (DOM), it's challenging to predict how quickly properties might be leased. However, the higher FMR of $1050 compared to the market rent of $818 presents a more attractive scenario for landlords participating in the Section 8 program. This higher rent could offset some of the administrative burdens associated with the program.
The gross yield from Section 8 participation would be higher due to the increased monthly rent. For a landlord, receiving $1050 per month instead of $818 represents a significant difference in annual income. While the exact cap rate cannot be determined without the median home value, the implied gross yield from the higher FMR is more favorable. It's important to note that the actual performance will depend on factors such as property management costs, vacancy rates, and maintenance expenses.
Given the limited data on DOM, landlords should consider the stability and reliability of Section 8 payments over the volatility of market rents. The higher rent under the Section 8 program provides a more predictable income stream, which can be particularly beneficial in areas with moderate rental activity and uncertain housing markets.
In conclusion, while the precise cap rate remains undetermined due to missing data on median home values, the higher gross yield from Section 8 rents at $1050 per month is more realistic for ZIP 66716, considering the moderate renter density and the stability offered by the program. This makes Section 8 participation a potentially lucrative option for landlords and small-portfolio investors.
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.