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 | $1,690 |
| 1 Bedroom | $1,760 |
| 2 Bedrooms | $2,090 |
| 3 Bedrooms | $2,740 |
| 4 Bedrooms | $3,070 |
| 5 Bedrooms | $3,561 |
| 6 Bedrooms | $3,988 |
| 7 Bedrooms | $4,307 |
| 8 Bedrooms | $4,522 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,760 | $174,444 | 1.01% | B |
| 2BR | $2,090 | $356,176 | 0.59% | F |
| 3BR | $2,740 | $554,368 | 0.49% | F |
| 4BR | $3,070 | $684,377 | 0.45% | F |
| 5BR | $3,561 | $809,728 | 0.44% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 80222 in Denver, CO, reveals a significant discrepancy between the Federal Market Rent (FMR) and the actual market rents. For a two-bedroom property, the annualized FMR is $24,120 ($2010 per month), while the Zillow Observed Rent Index (ZORI) indicates an annual market rent of $20,760 ($1,730 per month).
To calculate the gross yield, we use the median home value of $561,801. The gross yield based on the FMR would be approximately 4.3%, calculated by dividing the annualized FMR by the median home value ($24,120 / $561,801 = 0.043). On the other hand, using the ZORI market rent, the gross yield drops to about 3.7% ($20,760 / $561,801 = 0.037).
Given the 55.7% renter density in the area, it's clear that the demand for rental properties is strong. However, the 32-day days on market (DOM) suggests that properties are not staying vacant for long periods, indicating a competitive market where landlords might struggle to command higher rents consistently.
In this context, the ZORI-based gross yield of 3.7% is more realistic. Landlords should prepare for competition and the likelihood of tenants seeking the lowest possible rent, aligning more closely with the market rate rather than the higher FMR. This means that while the potential exists for higher yields through Section 8, the actual performance is likely to be closer to the market rent levels due to the dynamics of the local rental market.
The disparity between the FMR and ZORI gross yields highlights the importance of understanding local rental conditions. Investors should consider the strong rental demand but also the competitive environment when evaluating the potential returns of Section 8 properties in ZIP 80222.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.