Location: Farmington, NM | Metro: Farmington, NM 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 | $930 |
| 1 Bedroom | $950 |
| 2 Bedrooms | $1,240 |
| 3 Bedrooms | $1,630 |
| 4 Bedrooms | $1,760 |
| 5 Bedrooms | $2,042 |
| 6 Bedrooms | $2,287 |
| 7 Bedrooms | $2,470 |
| 8 Bedrooms | $2,594 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,630 | $355,742 | 0.46% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 87418 reveals a nuanced picture for potential investors. The Fair Market Rent (FMR) for a 2-bedroom apartment in this area, as of FY 2024, is set at $1010 per month. To annualize this figure, we multiply by 12, resulting in an annual rental income of $12,120. Using the median home value of $317,833 as a proxy for property investment costs, the implied gross yield under Section 8 guidelines can be calculated.
The calculation for the gross yield is straightforward: divide the annual rental income by the median home value. In this case, the gross yield is approximately 3.81%. This figure is derived by taking $12,120 and dividing it by $317,833. However, this scenario assumes that the property is valued at the median home price and that the landlord is willing to accept the Section 8 payment rate without any additional considerations.
Given the current market conditions, where the market rent is listed as N/A, it's challenging to provide a direct comparison. Typically, market rents can offer higher yields compared to government-subsidized rents. However, the lack of specific market rent data means we cannot accurately determine the gross yield for a comparable market-rate rental scenario.
Despite the absence of market rent figures, it's worth noting that the renter density in ZIP 87418 stands at 18.0%. This suggests a relatively low proportion of renters in the area, which could impact the demand for rental properties, including those participating in the Section 8 program. Additionally, the Days on Market (DOM) being listed as N/A indicates incomplete data, which could be due to various factors such as limited transactions or data reporting issues.
In conclusion, while the Section 8 scenario provides a clear gross yield of around 3.81%, the lack of market rent data makes a direct comparison difficult. Landlords and small-portfolio investors should consider the lower demand for rentals in this area and the implications of accepting Section 8 payments. Given the incomplete market data, the Section 8 scenario remains the most reliable benchmark for gross yield in ZIP 87418.
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.