Location: Conejos County, CO | Metro: Alamosa County, CO
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 | $850 |
| 1 Bedroom | $950 |
| 2 Bedrooms | $1,150 |
| 3 Bedrooms | $1,570 |
| 4 Bedrooms | $1,920 |
| 5 Bedrooms | $2,227 |
| 6 Bedrooms | $2,494 |
| 7 Bedrooms | $2,694 |
| 8 Bedrooms | $2,829 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,150 | $212,011 | 0.54% | F |
| 3BR | $1,570 | $309,358 | 0.51% | F |
| 4BR | $1,920 | $387,823 | 0.5% | F |
| 5BR | $2,227 | $448,659 | 0.5% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate picture for ZIP code 81101 in Alamosa, CO, reveals a stark contrast between government-subsidized rents and market rates. To derive the gross yield, we must first understand the annual rental income under each scenario.
In the case of Section 8, the Fair Market Rent (FMR) for a 2-bedroom unit is set at $1,000 per month. This translates into an annual rental income of $12,000. Given the median home value of $315,690, the implied gross yield for a Section 8 property would be approximately 3.8%. The calculation is straightforward: $12,000 annual income divided by $315,690 median home value equals a gross yield of 3.8%.
On the other hand, the market rent for a 2-bedroom unit, according to ZORI (Zillow Observed Rental Index), stands at $1,333 per month. This amounts to an annual rental income of $16,000. Using the same median home value of $315,690, the implied gross yield for a market-rate rental property is about 5.1%. This is calculated by dividing the $16,000 annual income by the $315,690 median home value.
The significant difference between these two yields — 3.8% for Section 8 versus 5.1% for market rate — underscores the financial reality facing landlords in Alamosa, CO. However, the decision on whether to pursue Section 8 tenants or aim for market rates should also consider the local rental market dynamics. With a renter density of 45.3%, there is a notable portion of the population seeking rental housing, which could support either market. Yet, the lack of data on days-on-market (DOM) suggests that it might be challenging to gauge the speed at which properties are rented out, which can affect cash flow and investment returns.
Given the higher gross yield, market-rate rentals appear more financially attractive. However, Section 8 provides stable, government-backed rental income, which can be beneficial for long-term investments despite the lower yield. The choice ultimately depends on the landlord's risk tolerance and investment goals.
For investors, the decision to enter the Section 8 or market-rate rental sector in Alamosa, CO, should be based on a thorough analysis of local market conditions, tenant demand, and the specific terms of Section 8 contracts. While the numbers clearly favor market-rate rentals, the security and predictability of Section 8 income cannot be overlooked.
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.