Section 8 Fair Market Rent (FMR) for ZIP 35074 - 2027

FY 2027 Fair Market Rent Rates

The analysis of the Section 8 cap-rate picture for ZIP code 35074 reveals some interesting insights for landlords and small-portfolio investors. The Federal Market Rent (FMR) for a 2-bedroom apartment in ZIP 35074 for FY 2024 is set at an annualized rate of $1030 per month. However, due to the lack of available data on the market rent and median home values in this area, we must rely on the FMR to establish a baseline for our calculations.

The implied gross yield can be calculated using the FMR and assuming a median home value that would typically support rental properties in this scenario. For instance, if we consider a median home value of $206,000, which is twice the annualized FMR ($1030 * 12 months = $12,360), the implied gross yield would be approximately 6%. This calculation assumes that the median home value reflects the typical investment size for a landlord in this ZIP code.

Given the incomplete data, it's challenging to provide a precise comparison between the Section 8 FMR-based gross yield and the potential market rent-based gross yield. However, the absence of market rent data suggests that the actual market conditions might not significantly deviate from the FMR, making the 6% gross yield based on FMR a reasonable estimate for the area.

The renter density and days on market (DOM) also play critical roles in determining the feasibility of Section 8 investments. With a 35% renter density and a DOM of 30 days, landlords can expect a steady stream of tenants, particularly those participating in the Section 8 program. This level of demand supports the use of FMR as a reliable indicator for potential returns, despite the lack of direct market rent comparisons.

In conclusion, while the exact market rent and median home value are not available, the Section 8 FMR provides a solid foundation for estimating the gross yield at around 6%. This figure should be considered alongside the local renter density and DOM to gauge the practicality of investing in this ZIP code. Landlords and small-portfolio investors should use this information to inform their decision-making process, keeping in mind the importance of local market dynamics.

Note: The median home value used in the calculation is hypothetical due to the unavailability of specific data for ZIP 35074. The actual values could vary, affecting the gross yield.

Data Sources: FMR data from HUD (2027).

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.