Location: Tacoma, WA | Metro: Tacoma, WA HUD Metro FMR Area
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 | $1,360 |
| 1 Bedroom | $1,530 |
| 2 Bedrooms | $1,880 |
| 3 Bedrooms | $2,590 |
| 4 Bedrooms | $2,930 |
| 5 Bedrooms | $3,399 |
| 6 Bedrooms | $3,807 |
| 7 Bedrooms | $4,112 |
| 8 Bedrooms | $4,318 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,880 | $464,519 | 0.4% | F |
| 3BR | $2,590 | $646,044 | 0.4% | F |
| 4BR | $2,930 | $756,174 | 0.39% | F |
| 5BR | $3,399 | $816,094 | 0.42% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 98467 (University Place, WA) reveals some key insights into potential investment returns. To begin, let's annualize the Fair Market Rent (FMR) and market rent figures for a 2-bedroom property. The annualized FMR for a 2BR unit in ZIP 98467 is $21,840 ($1820 x 12 months), while the annualized market rent is $19,956 ($1,663 x 12 months).
To calculate the implied gross yield, we divide these annualized figures by the median home value of $684,434. For the FMR scenario, the gross yield is approximately 3.19%. In contrast, the market rent scenario yields an implied gross yield of about 2.91%. These figures represent the potential income return on investment before accounting for expenses.
Given the 40.2% renter density in University Place, it's important to consider how likely it is that a property will remain rented at either the FMR or market rate. The high renter density suggests a robust demand for rental properties, which supports the possibility of maintaining occupancy at higher rates. However, the lack of data on Days on Market (DOM) makes it challenging to assess the speed at which properties can be leased out at different rates.
In reality, the FMR scenario is less likely to reflect typical rental income because landlords participating in the Section 8 program agree to charge no more than the FMR. This means that the actual rental income would most likely align with the market rent figure of $19,956 annually, implying a gross yield of 2.91%. While the FMR provides a higher gross yield of 3.19%, it does not accurately represent the income landlords would receive under normal market conditions when participating in the Section 8 program.
Therefore, for small-portfolio investors considering properties in ZIP 98467, the market rent scenario is a more realistic expectation for rental income, providing a gross yield of 2.91%. This should be used as a baseline for further analysis, including the calculation of net operating income (NOI) and other financial metrics.
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.