Location: Washington County, AL | Metro: Washington County, AL
| Unit Size | Monthly FMR |
|---|---|
| Studio | $750 |
| 1 Bedroom | $800 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,330 |
| 4 Bedrooms | $1,540 |
| 5 Bedrooms | $1,786 |
| 6 Bedrooms | $2,000 |
| 7 Bedrooms | $2,160 |
| 8 Bedrooms | $2,268 |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $980 for ZIP 36583 in fiscal year 2024 will sufficiently cover the mortgage on a home in this area. However, given the median home price of $285,000 as of August 2023, the FMR appears to be a reasonable figure. Assuming a typical mortgage rate of around 5%, a home priced at $285,000 would have a monthly mortgage payment of approximately $1,400, including principal, interest, taxes, and insurance. While $980 might not fully cover this amount, it can still contribute significantly towards the mortgage, especially when considering additional income from potential secondary units or rental increases.
The investor may also wonder if there is sufficient demand for renters at a 3.8% vacancy rate. Despite the relatively low vacancy rate, the demand remains steady. With 9 residential properties sold in the past year, and a median price of $35,000 for single-family homes, it indicates that there is a base level of demand for affordable housing in the area. Additionally, the high percentage of properties with more than 50% equity (87.22%) suggests that homeowners have a significant stake in their properties, which often translates to a stable rental market.
Another concern is whether Section 8 vouchers will keep pace with market rents. Unfortunately, the data provided does not offer specific insights into the voucher program's performance relative to market rents. However, historically, voucher programs aim to adjust to local market conditions. Given the median AVM value of $175,000 for properties sold in the last year, it's reasonable to assume that the voucher amounts are reviewed periodically to ensure they remain competitive. Investors should monitor local HUD announcements for updates on voucher adjustments.
In summary, while the FMR of $980 may not fully cover the mortgage on a $285,000 home, it can still contribute significantly. The low vacancy rate and presence of equity-rich homeowners suggest a solid demand for rental properties. Voucher adjustments should be tracked to ensure they align with market rents, but the historical trend is positive.
Data Sources: FMR data from HUD (2027). 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.