Location: Rhea County, TN | Metro: Bledsoe County, TN
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $820 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $1,080 |
| 3 Bedrooms | $1,300 |
| 4 Bedrooms | $1,480 |
| 5 Bedrooms | $1,717 |
| 6 Bedrooms | $1,923 |
| 7 Bedrooms | $2,077 |
| 8 Bedrooms | $2,181 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,080 | $196,026 | 0.55% | F |
| 3BR | $1,300 | $296,130 | 0.44% | F |
| 4BR | $1,480 | $375,189 | 0.39% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 37321 in Dayton, TN, reveals some key insights into potential investment opportunities. To begin, let's consider the Fair Market Rent (FMR) for a two-bedroom unit, which stands at $930 annually for Fiscal Year 2026, based on metropolitan data. Given the median home value of $263,969 in the area, this translates to an annualized gross yield of approximately 3.52%. The calculation is straightforward: $930 divided by $263,969 equals 0.00352, or 3.52%.
However, when we compare this to the market rent of $857 per month, derived from the Census ACS data, the gross yield drops to about 3.24%. This figure is obtained by multiplying $857 by 12 months, yielding an annual rent of $10,284, and then dividing that by the median home value, $263,969.
To determine which scenario is more realistic, we must consider the local rental market conditions. With a renter density of 33.4%, it suggests a moderate demand for rental properties. Additionally, the N/A-day DOM (days on market) indicates either a very efficient rental market or a lack of available data on how long properties typically stay on the market before being rented out. Given these factors, the market rent of $857 per month seems more reflective of the actual rental environment in Dayton, TN.
The gross yield comparison between the two scenarios is concrete: the FMR-based yield is 3.52%, while the market rent-based yield is 3.24%. Landlords and small-portfolio investors should focus on the market rent figure of $857 per month for a more accurate assessment of potential returns in ZIP 37321. This lower gross yield, while still positive, underscores the importance of thorough due diligence and understanding of local rental dynamics to ensure sustainable cash flows.
In conclusion, the implied gross yields from both the FMR and market rent provide a clear picture of the potential returns for Section 8 properties in Dayton, TN. While the FMR offers a slightly higher yield, the market rent scenario is more likely to represent the true rental income potential, given the local conditions. Investors should use these figures as a starting point for further analysis and decision-making.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.