Location: Morgan County, 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 | $1,480 |
| 1 Bedroom | $1,580 |
| 2 Bedrooms | $1,890 |
| 3 Bedrooms | $2,470 |
| 4 Bedrooms | $2,750 |
| 5 Bedrooms | $3,190 |
| 6 Bedrooms | $3,573 |
| 7 Bedrooms | $3,859 |
| 8 Bedrooms | $4,052 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,890 | $232,056 | 0.81% | C |
| 3BR | $2,470 | $321,545 | 0.77% | D |
| 4BR | $2,750 | $369,521 | 0.74% | D |
| 5BR | $3,190 | $431,088 | 0.74% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 80701, Fort Morgan, CO, reveals interesting insights into the potential investment returns for landlords and small-portfolio investors. To derive the cap-rate picture, we must first understand the relationship between the Fair Market Rent (FMR) and the median home value.
The annualized FMR for a 2-bedroom apartment in ZIP 80701 for FY 2024 is $1680. Given the median home value of $326,454, this translates to an implied gross yield of approximately 0.5%. This calculation is derived by taking the annual FMR ($1680) and dividing it by the median home value ($326,454).
In contrast, the market rent for a 2-bedroom property, according to the Census ACS, is $1,088 per month. When annualized, this equates to $13,056 per year, resulting in a significantly higher implied gross yield of about 4%. This figure is calculated by dividing the annualized market rent ($13,056) by the median home value ($326,454).
The disparity between these two yields highlights the importance of understanding the local rental market dynamics. With a renter density of 34.8%, it's evident that a substantial portion of the population in Fort Morgan relies on rental housing, which could influence the demand for Section 8 properties. However, the lack of data regarding the number of days on market (DOM) makes it challenging to predict how quickly a Section 8 property might be leased compared to a market-rate property.
Given the low implied gross yield of 0.5% from the FMR scenario, it is unlikely that many investors would find this attractive without considering other factors such as stable income streams and government subsidies. On the other hand, the market rent scenario offers a much more appealing gross yield of around 4%, aligning better with typical investment expectations.
In conclusion, while the Section 8 program provides stability and a guaranteed tenant, the gross yield based on FMR is considerably lower than what can be achieved through market rents. For most investors, the higher gross yield associated with market rents would likely be more realistic and desirable, especially when factoring in the renter density and the absence of clear DOM data.
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.