Location: Dale County, AL | Metro: Dothan, 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 | $690 |
| 1 Bedroom | $840 |
| 2 Bedrooms | $920 |
| 3 Bedrooms | $1,280 |
| 4 Bedrooms | $1,540 |
| 5 Bedrooms | $1,786 |
| 6 Bedrooms | $2,000 |
| 7 Bedrooms | $2,160 |
| 8 Bedrooms | $2,268 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,280 | $172,907 | 0.74% | D |
U.S. Census Bureau data (2024)
The analysis for ZIP code 36322 reveals a significant disparity between the Fair Market Rent (FMR) and the actual market rent, known as the Zillow Rent Index (ZORI). For fiscal year 2024, the FMR stands at $860, while the ZORI is $1,148. This creates a gap of $288, representing a 33.5% difference between what is considered fair market value and the prevailing rental rates.
In ZIP 36322, where 38.8% of residents are renters, landlords and small-portfolio investors must understand the implications of this gap. The median home value in the area is $151,664, and the median income is $47,276. Given these economic conditions, the FMR being lower than the market rent means that landlords who accept housing vouchers will be renting their properties below the open-market rate. This scenario can lead to reduced cash flow and potentially lower yields compared to renting out properties at market rates.
Accepting voucher tenants is a strategic decision that comes with trade-offs. While it ensures a steady stream of rental income guaranteed by the government, it also means landlords must operate at a discount. For instance, if a landlord rents a property at the FMR of $860 instead of the market rate of $1,148, they are foregoing approximately $288 per month. Over a year, this amounts to a loss of $3,456 in potential rental income, assuming a 12-month tenancy without breaks.
Investors should consider the overall economic context of ZIP 36322. With a median income of $47,276, many residents rely on housing assistance programs to afford decent housing. Therefore, accepting Section 8 vouchers can be seen as a social responsibility that aligns with the economic realities of the area. However, it also requires a careful assessment of property management costs and maintenance expenses to ensure profitability.
To summarize, the gap between FMR and market rent in ZIP 36322 is substantial, and landlords must weigh the benefits of guaranteed income against the cost of renting below market rates. This analysis underscores the importance of understanding local economic indicators when making investment decisions in the rental market.
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.