Location: Dothan, 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 | $730 |
| 1 Bedroom | $730 |
| 2 Bedrooms | $920 |
| 3 Bedrooms | $1,230 |
| 4 Bedrooms | $1,350 |
| 5 Bedrooms | $1,566 |
| 6 Bedrooms | $1,754 |
| 7 Bedrooms | $1,894 |
| 8 Bedrooms | $1,989 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,230 | $180,272 | 0.68% | D |
U.S. Census Bureau data (2024)
The analysis for ZIP code 36376 reveals interesting dynamics between Section 8 rental subsidies and market rents. Using the Federal Market Rent (FMR) for a two-bedroom apartment set at $890 per month for fiscal year 2024, the annualized income would be $10,680. Given the median home value of $162,146, this translates into an implied gross yield of approximately 6.6%. This calculation is based on the assumption that the property is rented out at the FMR rate throughout the year.
In contrast, if we use the market rent figure of $791 per month, derived from the Census American Community Survey, the annualized income drops to $9,492. The implied gross yield in this scenario is about 5.8%, indicating a lower return on investment compared to renting under the Section 8 program.
The gross yield comparison clearly favors the Section 8 program over market rents for ZIP 36376. However, the decision should also consider the local rental market conditions. With a renter density of 23.2%, it's evident that a significant portion of the population prefers owning homes rather than renting, which could impact the demand for rental properties. Additionally, the lack of data on days on market (DOM) suggests uncertainty around how quickly units can be leased, which is a critical factor for cash flow planning.
Despite these considerations, the higher gross yield offered by the Section 8 program makes it a more attractive option for landlords and small-portfolio investors looking to maximize returns in ZIP 36376. The stable income provided by government subsidies can offset some of the risks associated with lower tenant turnover and uncertain market conditions. However, investors must weigh this against potential administrative complexities and the long-term implications of participating in a subsidized housing program.
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.