Location: Sierra Vista-Douglas, AZ | Metro: Sierra Vista-Douglas, AZ MSA
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 | $810 |
| 1 Bedroom | $1,000 |
| 2 Bedrooms | $1,140 |
| 3 Bedrooms | $1,580 |
| 4 Bedrooms | $1,900 |
| 5 Bedrooms | $2,204 |
| 6 Bedrooms | $2,468 |
| 7 Bedrooms | $2,665 |
| 8 Bedrooms | $2,798 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,140 | $169,022 | 0.67% | D |
| 3BR | $1,580 | $219,527 | 0.72% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate scenario for ZIP 85625 (Pearce, AZ) can be analyzed using the Fair Market Rent (FMR) and market rent figures available for the area. The annualized Fair Market Rent for a 2-bedroom apartment in this ZIP code for FY 2024 is $920, while the Census ACS reports a market rent of $1,065 per month.
To calculate the implied gross yield, we first need to determine the annual rental income. For the Section 8 scenario, the annual rental income would be $920 multiplied by 12, totaling $11,040. For the market rent scenario, the annual rental income would be $1,065 multiplied by 12, resulting in $12,780.
The median home value in ZIP 85625 is $199,901. Using this figure, the implied gross yield for the Section 8 scenario is calculated as follows: $11,040 divided by $199,901 equals approximately 5.52%. In contrast, the implied gross yield for the market rent scenario is $12,780 divided by $199,901, equating to about 6.40%.
The renter density in Pearce, AZ is 9.3%, which suggests that there is a relatively low demand for rental properties in the area. This low density makes it less likely that landlords will be able to charge market rents consistently, especially if the property is part of a Section 8 program. Additionally, the N/A-day Days on Market (DOM) indicates that there is insufficient data to accurately gauge how quickly rental properties are leased in this area, further supporting the idea that the lower Section 8 rent is more realistic.
In conclusion, the gross yield for a property in ZIP 85625 participating in the Section 8 program is approximately 5.52%, whereas the gross yield based on market rent is around 6.40%. Given the low renter density and limited leasing activity data, the 5.52% gross yield derived from the Section 8 rent is more reflective of the actual investment potential in this area. Investors should consider these figures when evaluating the profitability of their real estate investments in Pearce, AZ.
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.