Location: DeKalb County, AL | Metro: Cherokee County, AL
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 | $760 |
| 1 Bedroom | $760 |
| 2 Bedrooms | $1,000 |
| 3 Bedrooms | $1,190 |
| 4 Bedrooms | $1,490 |
| 5 Bedrooms | $1,728 |
| 6 Bedrooms | $1,935 |
| 7 Bedrooms | $2,090 |
| 8 Bedrooms | $2,195 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,190 | $289,630 | 0.41% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 35983 provides insight into potential investment opportunities. Based on the Fair Market Rent (FMR) for a 2-bedroom apartment at $810 per month, the annualized income would be $9,720. Given the median home value of $246,281, the implied gross yield using the FMR is approximately 3.95%. This calculation assumes that the property can be rented out at the FMR rate, which is set by HUD for the fiscal year 2026.
In contrast, using the market rent figure of $775 per month from the Census ACS data, the annualized income drops to $9,300. The implied gross yield under this scenario is slightly lower at 3.78%. This reflects the actual rental rates observed in the area, which are typically below the FMR.
The 11.3% renter density in ZIP 35983 suggests a relatively low proportion of renters compared to homeowners, which could impact the demand for rental properties. However, this does not necessarily mean that Section 8 properties will have less demand, as they cater specifically to low-income renters who rely on government subsidies to afford housing.
The lack of data on days on market (DOM) makes it challenging to assess the speed at which properties are rented. However, it's important to note that Section 8 properties often have a steady stream of tenants due to the guaranteed rental assistance, which can lead to shorter vacancy periods compared to market-rate rentals.
Given the circumstances, the gross yield based on the FMR of 3.95% is more likely to be realized in practice. While market rents suggest a slightly lower yield of 3.78%, the stability and predictability of Section 8 rents generally result in higher occupancy rates and reduced risk of vacancies. Therefore, despite the lower renter density, the FMR-based gross yield offers a more conservative and reliable estimate for investors considering Section 8 properties in ZIP 35983.
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.