Location: Lincoln County, CO | Metro: Crowley County, CO
| Unit Size | Monthly FMR |
|---|---|
| Studio | $880 |
| 1 Bedroom | $890 |
| 2 Bedrooms | $1,170 |
| 3 Bedrooms | $1,400 |
| 4 Bedrooms | $1,820 |
| 5 Bedrooms | $2,111 |
| 6 Bedrooms | $2,364 |
| 7 Bedrooms | $2,553 |
| 8 Bedrooms | $2,681 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate picture for ZIP code 81076 reveals significant differences between the federally mandated Fair Market Rent (FMR) and the actual market conditions. Using the annualized 2BR FMR of $1,220 for FY 2026 and the median home value of $142,660, we can calculate the implied gross yield for properties participating in the Section 8 program. The gross yield is derived by dividing the annual rental income by the property value.
In the case of the Section 8 scenario, the gross yield would be calculated as follows:
This implies that a landlord participating in the Section 8 program for a property in ZIP 81076 could expect a gross yield of approximately 0.85%. This figure is based solely on the FMR and does not account for other factors such as operating expenses, vacancy rates, or property taxes.
Comparatively, using the market rent of $838 (based on Census ACS data), the gross yield would be:
The market rent scenario yields a lower gross return at 0.59%, indicating that landlords might find the Section 8 program more financially attractive due to the higher rental rate. However, the decision should also consider the renter density and the typical Days on Market (DOM).
ZIP 81076 has a renter density of 22.7%, suggesting that only a portion of potential tenants might be interested in renting through the Section 8 program. Given the N/A DOM, it's unclear how quickly units might turn over or the ease of finding Section 8 tenants. Nonetheless, the higher gross yield under the Section 8 scenario makes it more appealing despite the lower renter density.
For small-portfolio investors, the choice between Section 8 and market rents should be informed by these gross yields, with an understanding that the actual net operating income (NOI) will depend on individual property costs and management practices.
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.