Location: Alfalfa County, OK | Metro: Alfalfa County, OK
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 | $740 |
| 1 Bedroom | $750 |
| 2 Bedrooms | $980 |
| 3 Bedrooms | $1,360 |
| 4 Bedrooms | $1,640 |
| 5 Bedrooms | $1,902 |
| 6 Bedrooms | $2,130 |
| 7 Bedrooms | $2,300 |
| 8 Bedrooms | $2,415 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $980 | $46,112 | 2.13% | A+ |
| 3BR | $1,360 | $102,370 | 1.33% | A |
| 4BR | $1,640 | $210,682 | 0.78% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 73728, Cherokee, OK, provides a detailed look at the financial viability of properties in this area when leased under the federal housing program. To derive the cap rate, we must first understand the gross yield from both the Fair Market Rent (FMR) and the market rent.
Using the annualized 2BR FMR of $1,020 for FY 2026, the annual rental income would be $12,240. Given the median home value of $76,329, the implied gross yield for a property rented at the FMR is calculated as follows:
Gross Yield (FMR) = ($12,240 / $76,329) * 100 = 16.04%
On the other hand, using the Census ACS-reported market rent of $821 per month, the annual rental income drops to $9,852. The implied gross yield for a property rented at the market rate is:
Gross Yield (Market Rent) = ($9,852 / $76,329) * 100 = 12.91%
Comparing these two yields, it's evident that renting at the FMR offers a significantly higher return compared to renting at the market rate. However, the decision on which scenario is more realistic depends heavily on the local rental market dynamics and the demand for Section 8 rentals.
In ZIP 73728, the renter density stands at 27.0%, indicating a moderate level of rental activity. This figure suggests that there is a reasonable number of potential tenants who might be interested in renting through Section 8. However, the lack of data on days on market (DOM) makes it challenging to predict how quickly a property could be leased under either scenario.
Given the higher gross yield associated with the FMR, it would be advantageous for landlords and small-portfolio investors to consider participating in the Section 8 program. However, they should also factor in the 27.0% renter density and any additional administrative requirements or restrictions that come with being a Section 8 landlord.
In conclusion, while the FMR scenario presents a more attractive gross yield, the final decision should be based on a thorough understanding of the local rental market and the willingness of potential tenants to participate in the Section 8 program. The market rent scenario, although offering a lower gross yield, might be more reflective of the actual rental environment in Cherokee, OK.
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.