Location: Franklin County, AL | Metro: Decatur, AL MSA
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 | $740 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $920 |
| 3 Bedrooms | $1,190 |
| 4 Bedrooms | $1,400 |
| 5 Bedrooms | $1,624 |
| 6 Bedrooms | $1,819 |
| 7 Bedrooms | $1,965 |
| 8 Bedrooms | $2,063 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,190 | $198,934 | 0.6% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis for ZIP code 35654 is based on the significant gap between the Fair Market Rent (FMR) set at $860 and the actual market rent of $689, according to the Census ACS data for the fiscal year 2024. This gap amounts to $171, or approximately 20%, indicating that landlords can secure higher rents through voucher tenants compared to the open market.
In this scenario, where the FMR exceeds the market rent, voucher tenants become a strategic asset for landlords and small-portfolio investors. The higher subsidy amount allows property owners to achieve better yields without having to compete with lower market rents. For instance, if a landlord charges $860 per month, they can expect a consistent, government-backed income stream that surpasses the typical rental rates in the area.
The ZIP code 35654 has a rental rate of 32.0%, meaning a substantial portion of the population relies on renting. Additionally, the median home value stands at $186,669, while the median household income is $60,674. These figures suggest that many residents might struggle to afford homeownership, making rental properties, especially those eligible for Section 8 vouchers, highly desirable.
However, there are considerations when accepting voucher tenants. Landlords must ensure that their properties meet HUD standards and be prepared to undergo regular inspections. Moreover, the process of becoming a Section 8 landlord involves paperwork and compliance checks that can be time-consuming. Despite these hurdles, the financial benefits of receiving higher rent payments through the voucher program outweigh the costs in most cases.
In conclusion, the disparity between the FMR and the actual market rent in ZIP 35654 presents an opportunity for landlords to enhance their investment yields. With a robust percentage of renters and a median income that supports the demand for affordable housing, properties that accept Section 8 vouchers are likely to attract tenants who can pay the higher subsidized rate, leading to improved financial returns for the investor.
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.