Location: Cleveland, TN | Metro: Chattanooga, TN-GA MSA
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 | $930 |
| 1 Bedroom | $1,010 |
| 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 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,630 | $418,759 | 0.39% | F |
| 4BR | $1,710 | $528,598 | 0.32% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 37353 provides a clear picture of potential investment returns for landlords and small-portfolio investors. Using the Fair Market Rent (FMR) for a two-bedroom apartment set at $1180 annually for Fiscal Year 2024, the implied gross yield can be calculated. Given the median home value of $412,208 in this area, the annualized FMR of $1180 translates to a gross yield of approximately 0.29%. This calculation is derived by dividing the annual rental income by the property value.
Comparatively, using the market rent figure of $1,093 (as per the Census ACS), the gross yield would be slightly higher at around 0.26%. This is determined by taking the annual market rent ($1,093 multiplied by 12) and dividing it by the median home value of $412,208.
Given the 8.2% renter density in ZIP 37353, it's important to note that these yields are relatively low compared to typical real estate investments. The lack of data on days on market (DOM) indicates that there might be challenges in assessing how quickly properties can be leased, especially under the Section 8 program. However, the higher gross yield based on the FMR suggests that the government-set rent levels could provide a more stable, albeit modest, return on investment for those willing to participate in the Section 8 program.
The lower gross yield based on market rent reflects the reality that many properties in this ZIP code may command higher rents than what the Section 8 program offers. Therefore, for landlords and investors considering the Section 8 program, the 0.29% gross yield derived from the FMR is more relevant. It is a realistic expectation given the constraints of the program and the limited demand for subsidized housing, as indicated by the renter density.
In conclusion, while the gross yields for both scenarios are low, the FMR-based yield is more indicative of what landlords can expect if they decide to participate in the Section 8 program in ZIP 37353. Investors should consider these figures alongside other factors such as vacancy rates, maintenance costs, and the stability of tenant payments when making investment decisions.
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.