Location: Thomas County, KS | Metro: Rawlins County, KS
| Unit Size | Monthly FMR |
|---|---|
| Studio | $760 |
| 1 Bedroom | $810 |
| 2 Bedrooms | $1,040 |
| 3 Bedrooms | $1,240 |
| 4 Bedrooms | $1,580 |
| 5 Bedrooms | $1,833 |
| 6 Bedrooms | $2,053 |
| 7 Bedrooms | $2,217 |
| 8 Bedrooms | $2,328 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 67753 provides valuable insights into potential investment returns. Using the annualized Fair Market Rent (FMR) for a 2-bedroom apartment at $980 per month, we can calculate an implied gross yield of approximately 6.7%. This figure is derived from the formula: Gross Yield = (Annual Rent / Median Home Value). In this case, the calculation is ($980 * 12) / $145,776 = 0.067 or 6.7%.
In contrast, using the market rent figure of $800 per month for a 2-bedroom apartment, the implied gross yield drops to about 5.5%. The calculation here is ($800 * 12) / $145,776 = 0.055 or 5.5%. This lower yield reflects the typical market conditions without the federal subsidy support.
The FMR scenario presents a higher gross yield, making it more attractive for investors seeking immediate rental income. However, the reality of Section 8 participation must be considered. With a renter density of 20.3%, only a portion of the housing stock is likely to be occupied by renters, let alone those participating in the Section 8 program. Additionally, the N/A-day DOM (Days on Market) suggests that there might be challenges in securing tenants quickly, which could impact cash flow.
The market rent scenario, while offering a lower gross yield, may be more realistic given the limited number of Section 8 participants in the area. It ensures a steady stream of income without relying on government subsidies, which can be unpredictable due to funding changes and bureaucratic processes.
To conclude, while the Section 8 FMR of $980 per month offers a gross yield of 6.7%, the market rent of $800 per month provides a more reliable gross yield of 5.5%. Given the low renter density and potential difficulties in tenant acquisition, the latter scenario is likely more practical for landlords and small-portfolio investors. However, the decision should be based on individual investment strategies and risk tolerance.
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.