Location: Little Rock-North Little Rock-Conway, AR | Metro: Little Rock-North Little Rock-Conway, AR HUD Metro FMR Area
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 | $890 |
| 1 Bedroom | $900 |
| 2 Bedrooms | $1,040 |
| 3 Bedrooms | $1,400 |
| 4 Bedrooms | $1,680 |
| 5 Bedrooms | $1,949 |
| 6 Bedrooms | $2,183 |
| 7 Bedrooms | $2,358 |
| 8 Bedrooms | $2,476 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,400 | $310,385 | 0.45% | F |
U.S. Census Bureau data (2024)
The analysis for ZIP code 72142 reveals a distinct picture regarding the potential returns for landlords and small-portfolio investors interested in Section 8 properties. The Fair Market Rent (FMR) for a two-bedroom apartment in this area, as set for FY 2024, is $830 per month. Meanwhile, the market rent based on Census ACS data stands at $991 per month. Using these figures against the median home value of $304,843, we can derive the implied gross yield for both scenarios.
Starting with the Section 8 scenario, the annualized rental income would be $9,960 ($830 multiplied by 12 months). This results in an implied gross yield of approximately 3.27%. To calculate this, divide the annual rental income by the median home value: $9,960 / $304,843 = 0.0327, or 3.27%. For the market rent scenario, the annualized rental income jumps to $11,892 ($991 multiplied by 12 months), leading to a higher implied gross yield of about 3.90%. Calculated as $11,892 / $304,843 = 0.0390, or 3.90%.
Given that only 7.3% of residents in ZIP 72142 are renters, it's important to consider how this impacts the likelihood of achieving either of these yields. The low renter density suggests that there might be limited demand for rental units, particularly those participating in the Section 8 program. Additionally, the lack of data on the days on market (DOM) for rental listings further complicates the assessment of rental market dynamics.
While the market rent scenario offers a slightly better gross yield, the reality of the rental market in ZIP 72142 leans more towards the Section 8 scenario being more practical. With a lower proportion of residents seeking rentals, landlords might find it challenging to maintain a property at market rent levels consistently. Therefore, the guaranteed income from the Section 8 program, despite offering a lower gross yield, provides a more stable and predictable cash flow, which is essential for long-term investment planning.
In summary, while the market rent scenario presents a more attractive gross yield at 3.90%, the actual performance is likely to be closer to the Section 8 scenario's 3.27% gross yield due to the limited rental market presence in ZIP 72142. Investors should weigh the benefits of stability over potentially higher returns when making decisions about property investments in this area.
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.