Location: Tuscaloosa, 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 | $1,090 |
| 1 Bedroom | $1,140 |
| 2 Bedrooms | $1,300 |
| 3 Bedrooms | $1,630 |
| 4 Bedrooms | $1,760 |
| 5 Bedrooms | $2,042 |
| 6 Bedrooms | $2,287 |
| 7 Bedrooms | $2,470 |
| 8 Bedrooms | $2,594 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,300 | $197,706 | 0.66% | D |
| 3BR | $1,630 | $274,111 | 0.59% | F |
| 4BR | $1,760 | $339,677 | 0.52% | F |
| 5BR | $2,042 | $414,902 | 0.49% | F |
U.S. Census Bureau data (2024)
The ZIP code 35111, located in the McCalla, AL, Tuscaloosa, AL HUD Metro FMR Area, presents a unique opportunity for inclusion in a Section 8 portfolio strategy. This area serves best as a cash-flow anchor due to the significant spread between the Fair Market Rent (FMR) and the market rent. For fiscal year 2024, the FMR for ZIP 35111 is set at $1060, while the market rent stands at $1865. This means that landlords can expect a stable cash flow from tenants who qualify for Section 8 housing vouchers, which cover the difference between the FMR and the actual market rent.
The median home value in ZIP 35111 is $285,590, indicating a moderate cost of entry for property investment. However, the stability offered by the Section 8 program, combined with the lower FMR compared to market rents, ensures that properties in this ZIP code will generate consistent revenue. The FMR is designed to ensure that landlords receive a fair rental amount, even when dealing with subsidized tenants. Therefore, landlords can rely on this figure to maintain steady cash flows, making ZIP 35111 a reliable part of their investment portfolio.
While the area does not present itself as an immediate appreciation play—given the low 0.2% price-cut share and the unavailability of days on market (DOM) data—it offers a solid foundation for long-term investment. The slight price-cut share suggests that property values are relatively stable, without significant downward pressure. Additionally, the median income of $86,463 indicates that there is a reasonable economic base supporting the area, though the 10.8% renter share shows that a majority of residents prefer homeownership, which aligns well with the cash-flow anchor strategy.
In conclusion, ZIP 35111 should be considered primarily as a cash-flow anchor within a Section 8 portfolio strategy. The substantial gap between the FMR and market rent, coupled with the moderate median home value, makes it an attractive option for landlords seeking stable, predictable income streams. Although the potential for rapid appreciation is limited, the overall financial health and stability of the area provide a secure investment environment.
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.