Location: Salt Lake City, UT | Metro: Salt Lake City, UT HUD Metro FMR Area
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 | $1,140 |
| 1 Bedroom | $1,320 |
| 2 Bedrooms | $1,580 |
| 3 Bedrooms | $2,100 |
| 4 Bedrooms | $2,400 |
| 5 Bedrooms | $2,784 |
| 6 Bedrooms | $3,118 |
| 7 Bedrooms | $3,367 |
| 8 Bedrooms | $3,535 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,320 | $319,712 | 0.41% | F |
| 2BR | $1,580 | $372,646 | 0.42% | F |
| 3BR | $2,100 | $424,914 | 0.49% | F |
| 4BR | $2,400 | $456,949 | 0.53% | F |
| 5BR | $2,784 | $495,336 | 0.56% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 84104 in Salt Lake City, UT, reveals a nuanced picture when comparing the Federal Market Rent (FMR) and the actual market rent. Using the annualized 2BR FMR of $1470 for FY 2024, the gross yield is calculated at approximately 0.89%. This figure is derived by multiplying the monthly FMR by 12 and dividing it by the median home value of $410,414.
In contrast, using the Zillow Observed Rental Index (ZORI) of $1,664 per month, the gross yield increases to about 0.99%. This calculation is made by taking the ZORI figure, annualizing it, and then dividing by the median home value. The difference between these two yields highlights the potential disparity between government-set rental rates and the market rates that landlords might aim for.
The implied gross yield based on the FMR is 0.89%, while the gross yield based on the ZORI is 0.99%. Given the 38.2% renter density in ZIP 84104, it's important to note that the majority of homes are still occupied by owners, suggesting a competitive rental market. Additionally, the 12-day days-on-market (DOM) indicates that properties are rented quickly once listed, pointing towards strong demand for rentals.
While the FMR scenario offers a conservative view of rental income, the ZORI scenario aligns more closely with the current market conditions. However, the ZORI rate may not be fully achievable due to the Section 8 payment standards. Therefore, investors should consider the FMR yield as a baseline for their calculations, especially since the payment standard is designed to reflect reasonable rental costs within the area.
The quick turnover indicated by the 12-day DOM suggests that landlords can expect consistent occupancy, which is beneficial for cash flow stability. Despite this, the overall cap rate remains relatively low compared to other investment opportunities, making it essential for investors to factor in additional considerations such as property management costs and potential subsidies.
In summary, the gross yield based on FMR provides a more realistic starting point for Section 8 investments in ZIP 84104, while the ZORI yield represents the upper limit of what might be possible under ideal circumstances. Investors should use these figures to inform their decision-making process and understand the financial landscape of this particular ZIP code.
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.