Location: Birmingham-Hoover, AL | Metro: Birmingham-Hoover, AL 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 | $1,040 |
| 1 Bedroom | $1,110 |
| 2 Bedrooms | $1,210 |
| 3 Bedrooms | $1,520 |
| 4 Bedrooms | $1,710 |
| 5 Bedrooms | $1,984 |
| 6 Bedrooms | $2,222 |
| 7 Bedrooms | $2,400 |
| 8 Bedrooms | $2,520 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,210 | $118,627 | 1.02% | B |
| 3BR | $1,520 | $249,009 | 0.61% | D |
| 4BR | $1,710 | $356,643 | 0.48% | F |
| 5BR | $1,984 | $458,760 | 0.43% | F |
U.S. Census Bureau data (2024)
The ZIP code 35094 encompasses a suburban area of Leeds, Alabama, which is characterized by a relatively stable residential environment. With a total population of 14,854, the neighborhood has a modest rental market, where 23.1% of residents are renters. The median household income in this area stands at $74,625, indicating a middle-class community with a decent standard of living. The median home value in ZIP 35094 is $255,190, reflecting a moderate cost of living typical of suburban areas in the region.
From an investment perspective, the disparity between the Fair Market Rent (FMR) and the Zillow Observed Rental Index (ZORI) offers insight into potential opportunities. For the fiscal year 2024, the FMR for ZIP 35094 is set at $1,120, while the market rent, as measured by ZORI, is $1,611. This gap suggests that landlords who participate in the Section 8 program could face challenges in covering the full market rent, leading to lower net returns compared to non-subsidized properties. However, it also indicates that there is room for value-add strategies, such as improving property conditions or amenities, to justify higher rents above the FMR.
Given these economic factors, ZIP 35094 is better suited for a hands-on value-add buyer rather than a hands-off voucher operator. The lower FMR compared to the market rent presents an opportunity for active management to enhance property value and rental income. Landlords willing to invest in property improvements can capitalize on the higher market rents, thereby increasing their profitability. On the other hand, those looking for passive income through Section 8 vouchers might find the returns less attractive due to the significant difference between the FMR and the actual market rent.
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.