Location: Monroe County, TN | Metro: Cleveland, TN MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $770 |
| 1 Bedroom | $850 |
| 2 Bedrooms | $1,110 |
| 3 Bedrooms | $1,430 |
| 4 Bedrooms | $1,470 |
| 5 Bedrooms | $1,705 |
| 6 Bedrooms | $1,910 |
| 7 Bedrooms | $2,063 |
| 8 Bedrooms | $2,166 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 37369 reveals interesting insights into potential investment returns. The Fair Market Rent (FMR) for a 2-bedroom apartment in fiscal year 2024 is set at $920 per month. To annualize this figure, we multiply it by 12, resulting in an annual rental income of $11,040. This annual income can be used to calculate the implied gross yield.
Using the median home value of $223,892 as a proxy for property values, the implied gross yield based on the FMR would be approximately 4.9%. This calculation is derived by dividing the annual rental income ($11,040) by the median home value ($223,892), then multiplying by 100 to convert it to a percentage. However, this scenario assumes that the property can be rented out at the FMR rate, which might not always reflect the actual market conditions.
In contrast, the market rent for 2-bedroom apartments in ZIP 37369 is currently not available. Without this specific data point, it's challenging to provide a precise gross yield for the market rent scenario. Nevertheless, it's important to note that market rents often differ from FMRs, sometimes significantly, depending on local demand and competition.
Given the 9.7% renter density in the area, it suggests that a relatively small portion of the population is actively seeking rental housing. This low density could indicate a less competitive rental market, making it potentially easier to find tenants willing to pay the FMR. However, the lack of data on the days on market (DOM) for rentals makes it difficult to assess how quickly properties are leased in this ZIP code. A longer DOM could suggest a softer rental market, where achieving the FMR might be more challenging.
In conclusion, the implied gross yield based on the FMR of $920 per month is around 4.9%, while the exact gross yield for market rents remains indeterminable due to insufficient data. Investors should consider the lower renter density and the potential impact on leasing times when evaluating the realism of these yields. The FMR-based yield provides a conservative estimate, whereas market rents could offer higher or lower yields depending on the actual rental rates achieved.
Data Sources: FMR data from HUD (2027). 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.