Location: Chattanooga, 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 | $1,490 |
| 1 Bedroom | $1,550 |
| 2 Bedrooms | $1,690 |
| 3 Bedrooms | $2,090 |
| 4 Bedrooms | $2,220 |
| 5 Bedrooms | $2,575 |
| 6 Bedrooms | $2,884 |
| 7 Bedrooms | $3,115 |
| 8 Bedrooms | $3,271 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,550 | $234,145 | 0.66% | D |
| 2BR | $1,690 | $352,618 | 0.48% | F |
| 3BR | $2,090 | $515,007 | 0.41% | F |
| 4BR | $2,220 | $783,170 | 0.28% | F |
| 5BR | $2,575 | $1,193,572 | 0.22% | F |
U.S. Census Bureau data (2024)
The analysis of ZIP code 37405, located in Red Bank, TN, reveals a balanced market that offers both decent yield and moderate stability. The Fair Market Rent (FMR) for the fiscal year 2024 is set at $1,470, while the average market rent stands at $1,621. This indicates a slight premium over the FMR, which can be advantageous for landlords participating in the Section 8 program.
When considering the home value in the area, which is approximately $448,512, the rental yields appear modest. However, the rental market is robust enough to support these values. With 51.3% of the population being renters, there is a significant demand for rental properties, contributing to the stability of the market.
The days on market (DOM) figure of 27 days suggests that homes are sold relatively quickly, indicating an active real estate market. However, this does not directly translate to rental stability but rather points to a dynamic environment where property turnover is swift.
The median household income in the area is $81,337. While this income level is not exceptionally high, it provides a reasonable buffer against rental defaults and supports the ability of tenants to pay rent consistently.
To classify this market, we must consider the interplay between yield and stability. The rental market slightly exceeds the FMR, offering landlords a chance to earn above the guaranteed Section 8 rate. However, the relatively high home values and the active real estate market suggest that this area might experience some volatility in rental prices and demand.
Given the figures, ZIP 37405 leans towards a steady-cashflow zone. The strong rental demand and median income provide a stable foundation for long-term investments. Yet, the potential for price fluctuations and the fast-moving real estate market indicate that while it is not a high-risk, high-reward 'flip-style' market, it also does not offer the highest stability possible.
In conclusion, landlords and small-portfolio investors should find ZIP 37405 a suitable location for generating consistent cash flow, albeit with some awareness of the market dynamics that could influence rental pricing and demand.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.