Location: Lincoln, NE | Metro: Lincoln, NE HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,400 |
| 1 Bedroom | $1,490 |
| 2 Bedrooms | $1,820 |
| 3 Bedrooms | $2,520 |
| 4 Bedrooms | $2,830 |
| 5 Bedrooms | $3,283 |
| 6 Bedrooms | $3,677 |
| 7 Bedrooms | $3,971 |
| 8 Bedrooms | $4,170 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 68438 provides a clear picture of potential rental income scenarios. The Fair Market Rent (FMR) for a 2-bedroom apartment in this area, as of FY 2024, is set at $1070 per month. When annualized, this figure amounts to $12,840 per year. In contrast, the market rent for a similar unit stands at $1,607 per month, equating to an annual market rent of $19,284.
To derive the gross yield, we need to consider the median home value in the area. However, the median home value for ZIP 68438 is currently not available (N/A), making it challenging to calculate an exact cap rate. Nonetheless, we can still compare the gross yields based on the monthly rents provided.
In the case of Section 8 rentals, the gross yield would be based on the $1070 monthly FMR. For market-rate rentals, the gross yield would be calculated using the higher $1,607 monthly rate. Given the 17.2% renter density in the area, it's important to note that the number of days on the market (DOM) is also not available, which could impact the speed at which units are filled and the overall occupancy rates.
Considering the limited data, the $1070 monthly FMR represents a guaranteed income stream, albeit at a lower gross yield compared to the market rent. Landlords and small-portfolio investors should weigh the stability and predictability of Section 8 payments against the higher gross yield of market-rate rentals. The decision should also factor in the local rental market dynamics and the likelihood of securing tenants willing to pay the market rate of $1,607 per month.
While the higher market rent of $1,607 per month implies a better gross yield, the reality of the local rental market must be considered. With only 17.2% of the population being renters, there might be a competitive landscape for attracting tenants at market rates. Therefore, the Section 8 option, despite offering a lower gross yield, may present a more stable and predictable income source 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.