Location: Modesto, CA | Metro: Modesto, CA 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 | $1,680 |
| 1 Bedroom | $1,820 |
| 2 Bedrooms | $2,380 |
| 3 Bedrooms | $3,180 |
| 4 Bedrooms | $3,730 |
| 5 Bedrooms | $4,327 |
| 6 Bedrooms | $4,846 |
| 7 Bedrooms | $5,234 |
| 8 Bedrooms | $5,496 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,380 | $347,761 | 0.68% | D |
| 3BR | $3,180 | $468,611 | 0.68% | D |
| 4BR | $3,730 | $524,480 | 0.71% | D |
| 5BR | $4,327 | $597,218 | 0.72% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 95368 (Salida, CA) reveals two distinct scenarios based on the Fair Market Rent (FMR) and market rent figures for a 2BR property. The annualized FMR for a 2BR unit in Salida, CA, for FY 2024 is $2050, while the market rent, as per the Census ACS, stands at $2,081.
To derive the gross yield for both scenarios, we must first calculate the annual rental income. For the FMR scenario, the annual rental income would be $2050 multiplied by 12, equating to $24,600. For the market rent scenario, the annual rental income would be $2,081 multiplied by 12, totaling $24,972. Given the median home value of $490,147, the implied gross-yield for the FMR scenario is approximately 5% ($24,600 / $490,147 * 100), and for the market rent scenario, it is about 5.1% ($24,972 / $490,147 * 100).
The FMR scenario, at 5%, provides a conservative estimate of the gross yield that could be expected from a Section 8 tenant. This is the rate set by HUD and represents the maximum amount that can be charged to tenants participating in the program. On the other hand, the market rent scenario, at 5.1%, reflects the average rent that could be charged to a non-Section 8 tenant in the area, assuming they are willing to pay the market rate.
Given the 22.7% renter density in Salida, CA, the FMR scenario appears to be more realistic. This is because the low renter density suggests a smaller pool of potential tenants willing to pay market rates, making Section 8 tenants a more likely source of occupancy. Additionally, the N/A-day DOM (days on market) indicates that properties may take longer to rent out, further supporting the case for relying on guaranteed Section 8 rents.
In conclusion, while the market rent scenario offers a slightly higher gross-yield, the FMR scenario is more practical given the local rental market conditions. Landlords and small-portfolio investors should consider the stability and predictability of Section 8 rents when evaluating investment opportunities in ZIP 95368.
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.