Location: Haywood County, TN | Metro: Jackson, TN HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $820 |
| 1 Bedroom | $890 |
| 2 Bedrooms | $1,150 |
| 3 Bedrooms | $1,530 |
| 4 Bedrooms | $1,690 |
| 5 Bedrooms | $1,960 |
| 6 Bedrooms | $2,195 |
| 7 Bedrooms | $2,371 |
| 8 Bedrooms | $2,490 |
U.S. Census Bureau data (2024)
A skeptical investor looking at ZIP 38006 might raise several concerns regarding the feasibility of investing in the area through the Section 8 program. Here, we address those objections with available data.
Objection 1: Will Fair Market Rent (FMR) of $1050 cover the mortgage on a $206,533 home?
The FMR of $1050 for ZIP 38006 in fiscal year 2024 provides a baseline for rental income. However, the mortgage payment on a $206,533 home can vary significantly depending on interest rates and loan terms. Assuming a typical 30-year fixed-rate mortgage with an interest rate of 4%, the monthly mortgage payment would be approximately $990. This means that the FMR of $1050 would indeed cover the mortgage payment, leaving a small buffer for property taxes, insurance, and maintenance costs. But it's crucial to note that if interest rates rise or the investor opts for a shorter loan term, the mortgage payment could exceed the FMR.
Objection 2: Is there enough renter demand at 30.4%?
The renter occupancy rate of 30.4% in ZIP 38006 suggests that only a portion of the housing stock is rented out. This percentage may seem low, but it does not necessarily indicate a lack of demand. It could mean that homeownership is prevalent, or that the rental market is underserved. To accurately gauge demand, one would need to look at vacancy rates and the number of units available for rent. The data does not provide these specifics, so while 30.4% seems low, it does not conclusively show whether there is sufficient demand for Section 8 properties.
Objection 3: Will vouchers keep pace with $896 market rents?
The average market rent of $896 is below the FMR of $1050, indicating that the voucher amount should generally cover the market rent. However, the concern remains whether the voucher amount will adjust to keep up with any future increases in market rents. According to the latest data, the Housing Choice Voucher (Section 8) payment standard for ZIP 38006 is set at $1050, which exceeds the current market rent. If market rents increase, the voucher program is designed to periodically reassess and adjust payment standards, though the timing and extent of such adjustments are not guaranteed. Therefore, while the current voucher amount is sufficient, future alignment with rising market rents is uncertain.
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.