Location: Fort Smith, AR | Metro: Fort Smith, AR-OK MSA
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 | $820 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $1,090 |
| 3 Bedrooms | $1,470 |
| 4 Bedrooms | $1,810 |
| 5 Bedrooms | $2,100 |
| 6 Bedrooms | $2,352 |
| 7 Bedrooms | $2,540 |
| 8 Bedrooms | $2,667 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,470 | $251,954 | 0.58% | F |
| 4BR | $1,810 | $342,283 | 0.53% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 72921 reveals two distinct scenarios based on the Fair Market Rent (FMR) and market rent figures provided. For the FMR scenario, using the annualized 2BR rate of $890 per month from FY 2024, the annual rental income would be $10,680. Given the median home value of $246,769, this translates into an implied gross yield of approximately 4.33%. This calculation is derived by dividing the annual rental income by the property's value.
In contrast, when considering the market rent of $949 per month, as reported by the Census ACS, the annual rental income increases to $11,388. With the same median home value of $246,769, this yields an implied gross yield of about 4.62%. The difference between these two yields, while modest, can have significant implications for investment returns.
The 27.7% renter density in ZIP 72921 suggests that there is a substantial portion of the population that could potentially benefit from Section 8 housing assistance. However, the N/A-day DOM (Days on Market) indicates incomplete data regarding how quickly properties are rented out, which can affect the reliability of the gross yield figures. Despite this limitation, the higher gross yield of 4.62% based on market rent appears more realistic given the current economic conditions and typical rental market dynamics.
Investors should note that while the FMR-based yield of 4.33% is lower, it provides a guaranteed income stream through the Section 8 program. Conversely, the market rent-based yield of 4.62% offers a slightly higher potential return but comes with the risk of vacancy periods and the need to manage tenant selection without the program's support. The choice between these scenarios will depend on the investor's risk tolerance and investment goals.
Ultimately, the decision hinges on whether the investor prioritizes the stability of a government-backed rental income or seeks to maximize returns by navigating the private rental market. Both options present valid considerations, but the gross yield comparison clearly shows that market rent offers a marginally better return, albeit with additional risks.
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.