Location: Cleveland, TN | Metro: Cleveland, TN MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $910 |
| 1 Bedroom | $990 |
| 2 Bedrooms | $1,300 |
| 3 Bedrooms | $1,630 |
| 4 Bedrooms | $1,710 |
| 5 Bedrooms | $1,984 |
| 6 Bedrooms | $2,222 |
| 7 Bedrooms | $2,400 |
| 8 Bedrooms | $2,520 |
The analysis of the Section 8 cap-rate scenario for ZIP code 37320 in Tennessee reveals some critical insights that are essential for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a two-bedroom apartment in fiscal year 2024 is set at $1140 per month. Annualizing this figure yields a gross annual rental income of $13,680.
However, the median home value and market rent for ZIP 37320 are currently unavailable, making it challenging to provide a direct comparison between the Section 8 rent and the market rent. This absence of data also means we cannot calculate an exact gross yield based on market rents.
In the context of Section 8, the gross yield is derived from the monthly payment received from the housing authority, which is fixed at the FMR rate. Given the annualized FMR of $13,680, the gross yield can be calculated if the property's value were known. For instance, if a property in this ZIP code was valued at $150,000, the gross yield would be approximately 9.12%. If the property value were higher, say $200,000, the gross yield would drop to around 6.84%.
The lack of specific data on median home values and market rents suggests that the local real estate market might be less established or documented compared to other areas. This could mean that the Section 8 program provides a more predictable and stable income source for properties in this ZIP code.
Additionally, the renter density and days on market (DOM) are not specified, which typically would influence the decision-making process for investors. However, without these figures, we must rely on the consistency and predictability of the Section 8 program. The annualized FMR of $13,680 offers a reliable income stream, assuming the property qualifies and remains under the program.
Given the limited data, the gross yield based on the Section 8 FMR is more concrete and reliable than any assumptions made about market rents. For investors looking for stability and predictability in their investment returns, the Section 8 program in ZIP 37320 presents a clear opportunity, especially considering the fixed nature of the payments.
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.