Location: Prowers County, CO | Metro: Baca County, CO
| Unit Size | Monthly FMR |
|---|---|
| Studio | $750 |
| 1 Bedroom | $880 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,380 |
| 4 Bedrooms | $1,580 |
| 5 Bedrooms | $1,833 |
| 6 Bedrooms | $2,053 |
| 7 Bedrooms | $2,217 |
| 8 Bedrooms | $2,328 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 81041 provides insight into potential rental income scenarios for landlords and small-portfolio investors. The Federal Market Rent (FMR) for a 2-bedroom apartment in the metropolitan area for fiscal year 2026 is set at $970 per month. When annualized, this translates to an annual rent of $11,640. In contrast, the market rent based on Census ACS data stands at $585 per month, equating to an annual rent of $7,020.
To derive the implied gross yield, we need to consider the median home value in ZIP 81041. However, the data provided indicates that the median home value is not available (N/A), making it challenging to calculate precise cap-rates. Nonetheless, we can still discuss the implications of these two rent figures.
In a scenario where a landlord relies solely on the Section 8 program, the higher annualized rent of $11,640 would result in a more favorable gross yield compared to the market rent of $7,020. This is because the FMR rate is designed to cover the cost of housing that meets minimum property standards and is considered reasonable in the local market.
Given the 37.4% renter density in ZIP 81041, it is important to note that a significant portion of the population may prefer to own homes rather than rent. The N/A-day Days on Market (DOM) suggests that there is limited data on how quickly rental properties are typically leased, which could indicate either a robust or slow rental market depending on other factors such as vacancy rates and economic conditions.
While the Section 8 program offers a guaranteed source of income through the higher FMR rate, the reality of the rental market must also be considered. The market rent of $585 per month reflects what tenants might actually pay without government assistance, indicating a lower gross yield but potentially higher occupancy rates due to broader tenant availability.
Investors should weigh the benefits of a higher gross yield against the potential challenges of managing a Section 8 property, including compliance with HUD regulations and the possibility of longer lease terms. The actual decision will depend on individual investment strategies and risk tolerance.
Data Sources: FMR data from HUD (2027). 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.