Location: Chattanooga, TN | Metro: Chattanooga, TN-GA MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,170 |
| 1 Bedroom | $1,220 |
| 2 Bedrooms | $1,330 |
| 3 Bedrooms | $1,650 |
| 4 Bedrooms | $1,750 |
| 5 Bedrooms | $2,030 |
| 6 Bedrooms | $2,274 |
| 7 Bedrooms | $2,456 |
| 8 Bedrooms | $2,579 |
U.S. Census Bureau data (2024)
To decide whether you should buy in ZIP 37412 (East Ridge, TN) for Section 8 investment, follow this decision tree:
1) Does FMR $1240 (zip FY 2024) clear debt service on a $257,998 property?
No. The Fair Market Rent (FMR) of $1240 does not cover the average debt service for a property valued at $257,998. Debt service typically includes mortgage payments, property taxes, insurance, and maintenance costs. At this FMR, the rental income would be insufficient to meet these obligations, making it an unprofitable investment for Section 8.
It depends. If your debt service is significantly lower than the average due to favorable financing terms or low property taxes, then the $1240 FMR might suffice. However, this scenario is less common and requires a detailed financial analysis of your specific situation.
2) Is market rent $1,384 (ZORI) above, at, or below FMR?
Above. The Zillow Observed Rent Index (ZORI) of $1384 is higher than the FMR of $1240. This suggests that market conditions favor non-Section 8 tenants who can pay higher rents. Therefore, if you are considering a Section 8 investment, you should weigh the benefits against the potential for higher market rents.
At or Below. If the market rent were equal to or below the FMR, Section 8 could be a viable option. However, since the ZORI is above the FMR, the focus should be on market-rate rentals to maximize profitability.
3) Are 42.3% renters + 37-day DOM enough demand?
Yes. With 42.3% of the population being renters and a Days on Market (DOM) of 37 days, there is sufficient demand to consider investing in East Ridge, TN. A DOM of 37 days indicates that properties are generally rented out relatively quickly, which is a positive sign for the market.
No. If the percentage of renters was lower or the DOM was significantly longer, indicating slower leasing rates, then demand would be considered weak. However, given the current figures, demand is strong enough to support investments.
It depends. While the current demand appears healthy, other factors such as vacancy rates, competition, and local economic conditions also play a role. Analyze these additional metrics to make a fully informed decision.
In conclusion, the decision to invest in ZIP 37412 for Section 8 hinges on the ability of the FMR to cover your debt service. Given the higher market rent and strong demand, it may be more profitable to target market-rate tenants instead.
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.