Location: Grant County, NM | Metro: Grant 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 | $850 |
| 1 Bedroom | $860 |
| 2 Bedrooms | $1,110 |
| 3 Bedrooms | $1,330 |
| 4 Bedrooms | $1,740 |
| 5 Bedrooms | $2,018 |
| 6 Bedrooms | $2,260 |
| 7 Bedrooms | $2,441 |
| 8 Bedrooms | $2,563 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $860 | $145,137 | 0.59% | F |
| 2BR | $1,110 | $192,574 | 0.58% | F |
| 3BR | $1,330 | $281,452 | 0.47% | F |
| 4BR | $1,740 | $335,289 | 0.52% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 88061 in Silver City, NM, provides a clear picture of potential investment returns based on the Fair Market Rent (FMR) and market rent data.
First, consider the annualized 2BR FMR of $1,080 for fiscal year 2026. This translates into an annual rental income of $12,960 ($1,080 x 12 months). Given the median home value of $228,207, the implied gross yield using the FMR would be approximately 5.7%. This calculation is derived from dividing the annual rental income by the median home value: $12,960 / $228,207 = 0.0568 or 5.7%.
Next, examine the market rent figure of $863, sourced from the Census ACS data. Annualizing this rate yields an annual rental income of $10,356 ($863 x 12 months). Using the same median home value, the implied gross yield based on market rent is about 4.5%, calculated as $10,356 / $228,207 = 0.0454 or 4.5%.
The gross yield comparison between these two scenarios is significant. The FMR scenario suggests a higher return at 5.7%, whereas the market rent scenario indicates a lower return at 4.5%. However, the actual yield that investors can expect should be assessed carefully, considering the local rental market dynamics.
Silver City's renter density stands at 26.6%, indicating that a considerable portion of the population owns homes rather than renting. This low renter density implies that demand for rental properties might be limited, potentially making the FMR-based yield less realistic.
The N/A-day DOM (days on market) for rentals suggests either a lack of data or a very short period for properties to be listed before being rented. In either case, it points towards a strong rental market, which could support higher rental rates closer to the FMR.
In conclusion, while the FMR-based gross yield of 5.7% appears more attractive, the actual yield is likely to hover around the market rent-based yield of 4.5% due to the lower renter density. Investors should also factor in the potential for rental rate increases if the local market supports it, as indicated by the N/A-day DOM. A balanced approach, considering both the FMR and market rent, would provide a more accurate expectation of investment performance in ZIP 88061.
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.