Location: McKinley County, NM | Metro: Cibola County, NM
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 | $830 |
| 1 Bedroom | $870 |
| 2 Bedrooms | $1,040 |
| 3 Bedrooms | $1,240 |
| 4 Bedrooms | $1,370 |
| 5 Bedrooms | $1,589 |
| 6 Bedrooms | $1,780 |
| 7 Bedrooms | $1,922 |
| 8 Bedrooms | $2,018 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,240 | $164,472 | 0.75% | D |
| 4BR | $1,370 | $238,325 | 0.57% | F |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 87020 reveals a significant difference between the federal market rent (FMR) and the market rent, providing two distinct gross-yield figures.
The annualized 2BR FMR for ZIP 87020 is set at $1,020 for fiscal year 2026, based on metro area standards. This translates into an annual rental income of $12,240. Given the median home value of $154,611, the implied gross-yield for a property rented at the FMR would be approximately 8%. This calculation is derived from dividing the annual rental income by the median home value: $12,240 / $154,611 = 0.0792, or about 8%.
In contrast, the market rent for a 2BR property in ZIP 87020 is reported at $766 per month according to Census ACS data. This results in an annual rental income of $9,192. Using the same median home value, the implied gross-yield for a property rented at the market rate would be approximately 6%. This figure is calculated by dividing the annual rental income by the median home value: $9,192 / $154,611 = 0.06, or 6%.
Given the 31.0% renter density in ZIP 87020, it is important to consider the likelihood of securing tenants at either the FMR or the market rent. The FMR represents a government-set rate that is designed to ensure affordable housing for low-income families. However, the market rent reflects what tenants are willing to pay based on current demand and supply conditions.
The N/A-day DOM (days on market) suggests that there might be challenges in accurately assessing how quickly properties can be leased in this area. Despite this, the market rent provides a more realistic scenario for most investors, as it aligns with what the local market is bearing. While the 8% gross-yield from renting at the FMR might seem attractive, it is less likely to be achieved consistently without a guaranteed tenant base through the Section 8 program.
Therefore, for small-portfolio investors and landlords looking to assess potential returns, the 6% gross-yield based on market rent offers a clearer, more reliable picture of the expected performance in ZIP 87020. It is essential to factor in the specifics of the Section 8 program, including the application process and tenant selection criteria, when considering the higher FMR yield.
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.