Location: Daphne-Fairhope-Foley, AL | Metro: Daphne-Fairhope-Foley, 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 | $1,090 |
| 1 Bedroom | $1,210 |
| 2 Bedrooms | $1,320 |
| 3 Bedrooms | $1,710 |
| 4 Bedrooms | $2,160 |
| 5 Bedrooms | $2,506 |
| 6 Bedrooms | $2,807 |
| 7 Bedrooms | $3,032 |
| 8 Bedrooms | $3,184 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,710 | $429,729 | 0.4% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 36555 reveals a nuanced investment opportunity. To start, let's annualize the Fair Market Rent (FMR) and compare it to the market rent. For a two-bedroom apartment, the FMR for fiscal year 2024 is $1140 per month, which translates to an annual rental income of $13,680. The Census ACS provides a market rent figure of $1,156 per month, equating to an annual income of $13,872.
Using the median home value of $377,957, we can calculate the implied gross yield for both scenarios. In the case of FMR, the gross yield is approximately 3.62%, calculated as $13,680 divided by $377,957. When considering market rent, the gross yield slightly increases to 3.67%. These yields represent the potential return on investment before expenses such as property management, maintenance, insurance, and taxes are deducted.
The renter density of 13.1% suggests that a significant portion of the population in ZIP 36555 may be interested in Section 8 housing. However, the lack of data on the number of days on market (DOM) makes it challenging to assess the speed at which properties can be leased. Despite this, the FMR scenario provides a more conservative estimate of potential rental income, which aligns better with the lower renter density. On the other hand, the market rent scenario offers a slightly higher gross yield, indicating a potentially better return if the property can be rented at market rates.
Given the data, the FMR scenario seems more realistic for Section 8 investments due to the lower renter density. However, investors should also consider the possibility of renting at market rates to achieve a higher gross yield, especially if they can manage the property efficiently and attract tenants quickly. The choice between these scenarios ultimately depends on the investor's risk tolerance and the local housing market dynamics.
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.