Location: Kauai County, HI | Metro: Kauai County, HI
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 | $1,590 |
| 1 Bedroom | $1,600 |
| 2 Bedrooms | $2,100 |
| 3 Bedrooms | $2,580 |
| 4 Bedrooms | $2,870 |
| 5 Bedrooms | $3,329 |
| 6 Bedrooms | $3,728 |
| 7 Bedrooms | $4,026 |
| 8 Bedrooms | $4,227 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $2,580 | $795,921 | 0.32% | F |
| 4BR | $2,870 | $836,736 | 0.34% | F |
U.S. Census Bureau data (2024)
The analysis of Section 8 cap-rates for ZIP code 96705 reveals a stark contrast between the federally mandated Fair Market Rent (FMR) and the actual market rental rates. Using the annualized 2BR FMR of $2,110 for FY 2026, the gross yield can be calculated as follows: $2,110 multiplied by 12 months equals an annual rental income of $25,320. Dividing this by the median home value of $791,874 gives an implied gross yield of approximately 3.2%. On the other hand, using the market rent figure of $1,244 per month, the annual rental income would be $14,928, leading to an implied gross yield of about 1.9%.
Given the 28.0% renter density in ZIP 96705, it's important to note that the higher gross yield of 3.2% derived from the FMR is more theoretical. The actual market conditions, as reflected by the lower market rent, suggest that the 1.9% gross yield is more realistic. The lack of data on Days on Market (DOM) indicates that there might be limited turnover in properties, which could affect the ability to increase rents to the FMR level.
To conclude, while the potential exists for a higher gross yield based on the FMR, the current market conditions point towards a lower, yet more reliable, gross yield. This discrepancy underscores the importance of understanding local market dynamics and federal guidelines when evaluating investment opportunities in ZIP 96705.
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.