Location: Washington County, AL | Metro: Washington County, AL
| Unit Size | Monthly FMR |
|---|---|
| Studio | $700 |
| 1 Bedroom | $740 |
| 2 Bedrooms | $920 |
| 3 Bedrooms | $1,210 |
| 4 Bedrooms | $1,540 |
| 5 Bedrooms | $1,786 |
| 6 Bedrooms | $2,000 |
| 7 Bedrooms | $2,160 |
| 8 Bedrooms | $2,268 |
The analysis for ZIP code 36556 focuses on the disparity between the Fair Market Rent (FMR) and the actual market rent. The FMR for ZIP 36556 as of fiscal year 2024 is set at $960. However, the market rent is currently unavailable, which presents a significant challenge in providing a precise gap analysis. Despite this limitation, it's important to understand the implications when FMR is higher than the market rent.
When the FMR exceeds the market rent, landlords can leverage Section 8 vouchers to fill units that might otherwise remain vacant. This scenario transforms the property into a yield play, where landlords can achieve steady rental income without setting rent above the market rate. Voucher tenants provide a guaranteed payment stream, typically covering 70-80% of the rent, with the remainder coming from the tenant's contribution based on their income. In ZIP 36556, this means landlords can expect a consistent income even if the market rent is lower than the FMR.
Conversely, if the FMR were to be lower than the market rent, landlords would face the cost of housing voucher tenants at rates below what the open market could bear. This situation reduces potential rental income and necessitates careful management to ensure profitability. It also requires an understanding of the local rental market dynamics and the percentage of renters in the area, which is currently unknown, as well as the median home value and median income, both of which are also not available.
To fully assess the impact of Section 8 on rental properties in ZIP 36556, specific data points such as the percentage of renters, median home values, and median incomes would be crucial. These figures help determine the overall economic environment and how it influences the effectiveness of Section 8 as a tool for landlords and small-portfolio investors. Without these details, it's challenging to provide a comprehensive analysis of the financial benefits and drawbacks of participating in the Section 8 program in this particular ZIP code.
Data Sources: FMR data from HUD (2027).
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.