Location: Republic County, KS | Metro: Jewell County, KS
| Unit Size | Monthly FMR |
|---|---|
| Studio | $750 |
| 1 Bedroom | $940 |
| 2 Bedrooms | $1,030 |
| 3 Bedrooms | $1,300 |
| 4 Bedrooms | $1,710 |
| 5 Bedrooms | $1,984 |
| 6 Bedrooms | $2,222 |
| 7 Bedrooms | $2,400 |
| 8 Bedrooms | $2,520 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 66939 reveals a distinct difference between the federal market rent (FMR) and the market rent, impacting the gross yield for potential investments.
Using the annualized 2BR Federal Market Rent of $900 (for FY 2026), the gross yield can be calculated. Given that the median home value in the area is $156,608, the gross yield based on the FMR would be approximately 5.75%. This is derived by dividing the annual rent ($900) by the median home value ($156,608).
In contrast, using the Census ACS-reported market rent of $756, the gross yield drops significantly to around 4.83%. This calculation reflects the actual rental rates landlords might expect in the local market without participation in the Section 8 program.
The disparity between these two yields highlights the financial implications of choosing to participate in the Section 8 program versus setting market rents independently. The higher gross yield of 5.75% associated with the FMR suggests a potentially more attractive investment scenario for landlords willing to engage with Section 8 tenants.
However, the decision must also consider the local rental market conditions. With a renter density of 23.4%, it indicates a relatively low proportion of renters in the area, which could impact the demand for Section 8 properties. Additionally, the N/A-day DOM (days on market) suggests either insufficient data or an unusually quick turnover rate for rentals, which could mean that properties are quickly occupied but does not provide insight into the competition faced by Section 8 properties.
Given these factors, the 5.75% gross yield under the Section 8 scenario appears more realistic for landlords who are able to secure Section 8 contracts. The higher rent figure aligns with the government subsidy, reducing the risk of vacancy and ensuring a steady income stream, albeit at the cost of potential administrative complexities.
On the other hand, the 4.83% gross yield based on market rent reflects the reality of the local rental market, where landlords might face challenges in maintaining occupancy rates without the guaranteed income from Section 8. This lower yield should be considered in light of the competitive landscape and the potential difficulty in attracting and retaining tenants.
In conclusion, while the Section 8 program offers a higher gross yield, the decision to participate should be made considering the local market dynamics, including renter density and the speed at which properties are typically rented. For small-portfolio investors and landlords, the choice between these two scenarios will depend on their risk tolerance and administrative capacity.
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.