Location: Denver-Aurora-Centennial, CO | Metro: Denver-Aurora-Centennial, CO 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 | $2,330 |
| 1 Bedroom | $2,440 |
| 2 Bedrooms | $2,890 |
| 3 Bedrooms | $3,790 |
| 4 Bedrooms | $4,240 |
| 5 Bedrooms | $4,918 |
| 6 Bedrooms | $5,508 |
| 7 Bedrooms | $5,949 |
| 8 Bedrooms | $6,246 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,890 | $426,671 | 0.68% | D |
| 3BR | $3,790 | $513,947 | 0.74% | D |
| 4BR | $4,240 | $576,960 | 0.73% | D |
| 5BR | $4,918 | $634,264 | 0.78% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 80018 in Aurora, CO, reveals two distinct rental income scenarios based on the Fair Market Rent (FMR) and Zillow's Observed Rental Index (ZORI).
Using the annualized 2BR FMR of $2800 for FY 2024, the gross yield can be calculated as follows:
$2800 annualized rent divided by the median home value of $543,356 equals an implied gross yield of approximately 0.515%, or 5.15%.
In contrast, using the market rent figure of $2,492 from ZORI, the gross yield is lower:
$2,492 annualized rent divided by the median home value of $543,356 equals an implied gross yield of approximately 0.458%, or 4.58%.
The difference between these yields is significant. The FMR scenario suggests a higher potential rental income, but it does not necessarily reflect the actual market conditions. Given that only 9.5% of the population in ZIP 80018 are renters, and the days on market (DOM) is 34, the ZORI-based gross yield of 4.58% is more realistic.
The higher FMR of 5.15% gross yield is likely an overestimation, as it assumes a higher proportion of tenants willing to pay the FMR rate. However, with a renter density of just 9.5%, finding tenants who qualify and are willing to pay the FMR rate may be challenging. Moreover, the 34-day DOM indicates a relatively quick turnover, suggesting that market rents are closer to the ZORI figure.
Therefore, for investment purposes, relying on the ZORI-based gross yield of 4.58% provides a clearer, more accurate picture of the potential returns for properties participating in the Section 8 program in ZIP 80018.
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.