Location: Fremont County, CO | Metro: Custer 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 | $1,600 |
| 1 Bedroom | $1,640 |
| 2 Bedrooms | $2,150 |
| 3 Bedrooms | $2,690 |
| 4 Bedrooms | $3,340 |
| 5 Bedrooms | $3,874 |
| 6 Bedrooms | $4,339 |
| 7 Bedrooms | $4,686 |
| 8 Bedrooms | $4,920 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,640 | $265,384 | 0.62% | D |
| 2BR | $2,150 | $362,454 | 0.59% | F |
| 3BR | $2,690 | $427,640 | 0.63% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 81223, Cotopaxi, Colorado, reveals an interesting scenario when comparing the Federal Market Rent (FMR) to the actual market rent. Using the annualized 2BR FMR of $1,850 for fiscal year 2026, the implied gross yield for a property in this area is approximately 0.49%. This calculation is derived by taking the annualized FMR ($1,850 x 12 months = $22,200) and dividing it by the median home value of $373,548. In contrast, using the market rent figure of $1,699 from the Census ACS, the implied gross yield drops to about 0.45%, calculated by multiplying the monthly rent by 12 months ($1,699 x 12 = $20,388) and then dividing by the median home value.
The higher gross yield based on FMR suggests that Section 8 properties could potentially offer a better return compared to the general rental market. However, the reality of the situation is more nuanced. With only 8.4% of the population being renters, the demand for rental properties, including those under the Section 8 program, is relatively low. This can lead to longer vacancy periods, which can negatively impact the overall yield. Additionally, the N/A-day DOM (days on market) indicates incomplete data, which could mean that there's either insufficient data on rental listings or that the turnover rate for rentals is unusually low or high, further complicating the investment decision.
In conclusion, while the FMR-based gross yield of 0.49% is slightly more favorable than the market rent-based gross yield of 0.45%, the low renter density and unclear DOM data suggest that the market rent scenario might be more realistic for most investors. The potential benefits of higher yields must be weighed against the challenges posed by lower demand and possibly extended vacancy periods.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.