Location: Fort Collins-Loveland, CO | Metro: Boulder, 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 | $1,790 |
| 1 Bedroom | $1,970 |
| 2 Bedrooms | $2,270 |
| 3 Bedrooms | $3,030 |
| 4 Bedrooms | $3,450 |
| 5 Bedrooms | $4,002 |
| 6 Bedrooms | $4,482 |
| 7 Bedrooms | $4,841 |
| 8 Bedrooms | $5,083 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,970 | $390,446 | 0.5% | F |
| 2BR | $2,270 | $558,845 | 0.41% | F |
| 3BR | $3,030 | $802,325 | 0.38% | F |
| 4BR | $3,450 | $1,004,315 | 0.34% | F |
| 5BR | $4,002 | $1,070,966 | 0.37% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis for ZIP code 80540, located in Lyons, CO, highlights a significant gap between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR is set at $2120, whereas the Census American Community Survey (ACS) reports the market rent at $2,112. This represents a positive spread of $8 per unit, or approximately 0.38%, indicating that the FMR slightly exceeds the market rent.
In this scenario, where the FMR is higher than the market rent, landlords and small-portfolio investors can leverage this to create a yield play. Voucher tenants, who receive rental assistance through the Section 8 program, provide a guaranteed income stream that aligns closely with the FMR. Given the median home value of $748,420 and the median income of $139,521 in Lyons, CO, landlords can expect a steady cash flow from these tenants without the risk of vacancy common in the open market. The low percentage of renters (11.0%) suggests a smaller pool of potential open-market tenants, making the Section 8 program an attractive option for maintaining occupancy and ensuring stable returns.
The yield play is further supported by the fact that the FMR is designed to cover the cost of housing in areas where the typical market rent might be lower. In ZIP 80540, landlords accepting Section 8 vouchers can benefit from the government's willingness to pay slightly above the market rate, thereby offsetting any potential costs associated with managing voucher tenants. These costs include administrative overhead, such as processing paperwork and dealing with the Housing Authority, which are necessary but manageable aspects of the business.
To summarize, the $8 spread between the FMR and market rent in ZIP 80540 makes it a compelling opportunity for landlords and small-portfolio investors to maximize their yields. The guaranteed income from voucher tenants, coupled with the limited number of renters in the area, positions Section 8 as a strategic asset management tool. Landlords should consider the benefits of this arrangement carefully, especially in light of the local economic conditions and the stability it offers compared to the volatile nature of the open rental market.
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.