Section 8 Fair Market Rent (FMR) for ZIP 38016 - 2027

Investment Score for ZIP 38016

Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)

FY 2027 Fair Market Rent Rates

Unit Size	Monthly FMR
Studio	$1,350
1 Bedroom	$1,460
2 Bedrooms	$1,600
3 Bedrooms	$2,110
4 Bedrooms	$2,440
5 Bedrooms	$2,830
6 Bedrooms	$3,170
7 Bedrooms	$3,424
8 Bedrooms	$3,595

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$1,600	$184,004	0.87%	C
3BR	$2,110	$262,840	0.8%	C
4BR	$2,440	$328,466	0.74%	D
5BR	$2,830	$371,760	0.76%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 38016 (Cordova, TN) #### Section 8 Voucher Dynamics In ZIP code 38016, the Fair Market Rent (FMR) for a two-bedroom unit is set at $1570 per month for 2026. This figure represents 24.6% of the median household income of $76,569, which indicates that it is reasonably aligned with the economic capacity of residents. However, the actual rental market dynamics suggest a different story. The Zillow median price for a two-bedroom home in this area is $183,844, which translates into a monthly rent of approximately $1532 when considering typical mortgage payments, property taxes, insurance, and maintenance costs. Given the Price-to-FMR ratio of 9.8x, it becomes clear that the actual market rents significantly exceed the FMR. This discrepancy poses several challenges for voucher holders. Firstly, landlords who accept Section 8 vouchers might find it difficult to compete with market rents, leading to potential vacancies or reduced occupancy rates. Secondly, tenants with vouchers might struggle to find units that accept their assistance, especially if they are looking for larger units like three or four bedrooms where the FMR is notably lower compared to the median home value. For instance, the FMR for a three-bedroom unit is $2070, while the Zillow median suggests a higher rent would be necessary to cover costs, making it less attractive for landlords to accept vouchers for these sizes. #### Affordability & Renter Profile The population of Cordova, TN, is 44,136, with a significant portion of 45.3% being renters. This high percentage of renters suggests a robust demand for rental properties, but the affordability of housing remains a concern. With a median household income of $76,569, the majority of residents should theoretically be able to afford the FMRs for one and two-bedroom units. However, the high occupancy rate of 91.9% implies that there is little room for new entrants into the rental market without increasing competition and potentially driving up rents. Given the high renter percentage and occupancy rate, it is likely that the market is tight, with limited supply meeting high demand. This tightness could lead to upward pressure on rents, further exacerbating the gap between FMR and actual market rates. Additionally, the high proportion of renters indicates that there is a substantial need for affordable housing options, particularly for those relying on Section 8 vouchers. #### Investor Angle From an investor perspective, the ZIP code 38016 presents both opportunities and challenges. The FMRs provide a baseline for what tenants with vouchers can afford, but the actual market rents are much higher. For example, a two-bedroom unit priced at the FMR of $1570 would generate a monthly cash flow of about $35 if the market rent is closer to $1532, assuming typical expenses. However, this calculation does not account for the fact that market rents are often higher due to the tight market conditions and the high Zillow median price. To determine the investment grade, we must consider the risk versus reward. While the high occupancy rate suggests strong demand, the low FMR relative to market rates means that investors might have to rely on non-voucher tenants to achieve positive cash flows. The Price-to-FMR ratio of 9.8x indicates that the investment would likely be cash-flow negative if solely relying on FMRs, making it a higher-risk proposition unless the investor can secure above-market rents or has a strategy to attract non-voucher tenants. #### Specific Actionable Insights 1. **Focus on One and Two-Bedroom Units**: Given the FMRs and the median household income, one and two-bedroom units are most likely to be occupied by voucher holders. Investors should prioritize these unit sizes to maximize the chances of finding tenants with Section 8 vouchers. For example, a one-bedroom unit at $1400 per month is more feasible for voucher holders than a three-bedroom unit at $2070. 2. **Consider Mixed Tenant Strategies**: To ensure positive cash flows, investors might want to adopt a mixed tenant approach. This involves accepting a combination of voucher holders and non-voucher tenants. For instance, a two-bedroom unit priced at $1570 might be occupied by a voucher holder, while a three-bedroom unit priced at $2070 might require a non-voucher tenant paying closer to $2400 to break even. 3. **Evaluate Property Location and Condition**: In a tight market, location and condition play crucial roles. Properties in prime locations or those that are well-maintained and updated are more likely to attract non-voucher tenants willing to pay higher rents. Investors should focus on acquiring properties that offer these advantages to balance out the lower rents from voucher holders. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 38016 is to **Hold**. While the area shows strong demand and a high renter percentage, the tight market conditions and the significant gap between FMR and actual market rents make it challenging to achieve positive cash flows solely through voucher holders. Investors should carefully evaluate their portfolio mix and consider strategies to attract non-voucher tenants to ensure profitability. The high occupancy rate and significant renter population indicate that there is a solid foundation for rental demand, but the investment requires a nuanced approach to succeed.

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.