Location: Colorado Springs, CO | Metro: Colorado Springs, CO 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 | $1,480 |
| 1 Bedroom | $1,810 |
| 2 Bedrooms | $2,130 |
| 3 Bedrooms | $2,950 |
| 4 Bedrooms | $3,380 |
| 5 Bedrooms | $3,921 |
| 6 Bedrooms | $4,392 |
| 7 Bedrooms | $4,743 |
| 8 Bedrooms | $4,980 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,130 | $408,187 | 0.52% | F |
| 3BR | $2,950 | $595,002 | 0.5% | F |
| 4BR | $3,380 | $752,665 | 0.45% | F |
| 5BR | $3,921 | $871,370 | 0.45% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 80132 in Monument, CO, reveals interesting insights into potential investment opportunities. To start, let's look at the annualized Fair Market Rent (FMR) for a two-bedroom property, which stands at $24,300 per year (FY 2024). Meanwhile, the Zillow Observed Rent Index (ZORI) for a similar property is set at an annual market rent of $26,032. The median home value in this area is $752,331.
Using these figures, we can calculate the implied gross yield for both the FMR and market rent scenarios. For the FMR scenario, the gross yield would be approximately 3.23% ($24,300 / $752,331). In contrast, the gross yield based on market rent would be around 3.46% ($26,032 / $752,331).
Given the 12.4% renter density and the average days on market (DOM) of 39 days, it becomes clear that the market rent scenario is more realistic. The relatively low renter density suggests that the demand for rental properties is not overwhelming, but the short DOM indicates that properties do get leased quickly once they become available. This quick leasing dynamic supports the higher market rent figure, implying a slightly better gross yield.
Investors should note that while the difference between the two yields might seem small, it can significantly impact overall returns over time. Moreover, the short DOM and the fact that market rents are higher than FMRs suggest that there is a competitive advantage for landlords who can offer properties at or near market rates. This could mean that properties participating in the Section 8 program might face challenges in terms of occupancy and thus yield, unless they are strategically priced.
In conclusion, while the FMR provides a conservative baseline for gross yield at 3.23%, the more likely scenario for landlords and small-portfolio investors is the market rent, which offers a gross yield of 3.46%. This analysis underscores the importance of understanding local rental dynamics and the potential benefits of positioning properties competitively in the market.
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.