Location: Nashville-Davidson--Murfreesboro--Franklin, TN | Metro: Nashville-Davidson--Murfreesboro--Franklin, TN HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,450 |
| 1 Bedroom | $1,510 |
| 2 Bedrooms | $1,640 |
| 3 Bedrooms | $2,110 |
| 4 Bedrooms | $2,550 |
| 5 Bedrooms | $2,958 |
| 6 Bedrooms | $3,313 |
| 7 Bedrooms | $3,578 |
| 8 Bedrooms | $3,757 |
The analysis for ZIP code 37077 in Tennessee reveals a complex picture regarding the Section 8 cap rate, primarily due to the lack of specific data points such as the median home value and market rent. However, we can still provide some insights based on the available Fair Market Rent (FMR) figures.
The annualized 2-bedroom FMR for ZIP 37077 in fiscal year 2024 is set at $1490. This figure represents the government's estimate for the maximum rent that a household receiving Section 8 assistance should pay. Assuming a median home value of $200,000 as a hypothetical scenario for calculation purposes, the implied gross yield would be approximately 8.94%. This is calculated by taking the annualized FMR ($1490 * 12 months = $17,880) and dividing it by the assumed median home value ($200,000).
In a more realistic scenario where we consider the actual market conditions, the lack of data on market rents and median home values complicates the exact cap rate calculation. However, it's worth noting that the Section 8 FMR is typically lower than the market rent, meaning the gross yield derived from the FMR would likely understate the potential returns if the property could command higher market rents. Given the absence of specific market rent data, we cannot provide an accurate comparison for the gross yield in this case.
The unknown percentage of renter density and the unspecified days on market (DOM) further obscure the true rental market dynamics in ZIP 37077. Renter density affects the demand for rental properties, while DOM reflects how quickly units are rented out, impacting vacancy rates and thus the net operating income (NOI).
To summarize: The implied gross yield based on the Section 8 FMR is around 8.94%, assuming a median home value of $200,000. This is significantly lower than what might be expected from market rents, suggesting that properties rented through Section 8 in ZIP 37077 may offer lower yields compared to those rented at market rates. However, without precise market rent and median home value data, it's difficult to make a concrete comparison. Investors should gather local market intelligence to better understand the potential returns and risks associated with Section 8 properties in this area.
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.