Section 8 Fair Market Rent (FMR) for ZIP 36851 - 2027

FY 2027 Fair Market Rent Rates

The analysis for ZIP code 36851 in the context of Section 8 housing reveals a complex picture due to the lack of complete data. The Family Monthly Rent (FMR) for a two-bedroom unit in the fiscal year 2026 is set at $1,000, which represents the government's estimate of what it will pay towards rent for eligible participants in the area. However, the median home value and the market rent for similar units are not available, complicating a direct comparison.

To derive a rough cap-rate picture, we must first understand the concept of the cap rate. It is the ratio between the net operating income produced by an asset and its purchase price or current value. In the case of Section 8 properties, the gross yield can be estimated using the FMR as a proxy for rental income, assuming 100% occupancy and no vacancies. Given the FMR of $1,000 for a two-bedroom unit, the annualized rental income would be $12,000.

Without the median home value, we cannot calculate the exact cap rate. However, if we assume that the median home value is significantly higher than the annualized rental income, the implied gross yield would be relatively low. For example, if the median home value were $200,000, the implied gross yield would be 6% ($12,000 / $200,000 * 100). This scenario suggests that the property would not be particularly attractive to investors seeking high returns.

In contrast, if the market rent were available and higher than the FMR, the gross yield would improve. Unfortunately, the market rent for comparable units is not specified, making it impossible to provide a definitive comparison. If the market rent were closer to the FMR or even lower, the gross yield derived from Section 8 would be more favorable.

The N/A% renter density and N/A-day days on market (DOM) further complicate the assessment. Renter density indicates the percentage of the population renting versus owning homes, while DOM reflects how quickly rental units are typically filled. High renter density and short DOM could imply a robust demand for rentals, including those covered by Section 8, potentially offsetting the lower gross yields.

In conclusion, based on the provided data, the implied gross yield from Section 8 in ZIP 36851 is likely to be modest, especially when compared to potential market rents. The actual attractiveness of these investments would depend on the median home value and the specifics of market rent, which are currently unavailable. Additionally, the impact of local renter density and DOM should be considered in any investment decision.

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.