Location: Memphis, TN | Metro: Memphis, TN-MS-AR HUD Metro FMR Area
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 | $1,500 |
| 1 Bedroom | $1,630 |
| 2 Bedrooms | $1,780 |
| 3 Bedrooms | $2,350 |
| 4 Bedrooms | $2,710 |
| 5 Bedrooms | $3,144 |
| 6 Bedrooms | $3,521 |
| 7 Bedrooms | $3,803 |
| 8 Bedrooms | $3,993 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,780 | $189,542 | 0.94% | C |
| 3BR | $2,350 | $253,625 | 0.93% | C |
| 4BR | $2,710 | $338,537 | 0.8% | C |
| 5BR | $3,144 | $433,436 | 0.73% | D |
U.S. Census Bureau data (2024)
In ZIP code 38018 of Memphis, TN, the potential for investment in Section 8 properties comes with several notable risks that landlords must be aware of. Firstly, tenant turnover is a significant concern. The market rent stands at $1,789, while the Fair Market Rent (FMR) for FY 2024 is set at $1,770. This close alignment suggests that tenants may frequently move between market-rate and subsidized housing, leading to higher turnover rates and increased costs associated with finding new tenants.
Vacancy exposure is another critical issue. With an average Days on Market (DOM) of 46 days, landlords might face periods where their units remain vacant, impacting cash flow. During these times, there is no rental income coming in, which can put financial pressure on property owners.
The risk of deferred maintenance is also present. Given the typical home value of $289,986 and a median household income of $90,040, some tenants might struggle to keep up with maintenance expectations. Landlords should prepare for potential additional expenses related to upkeep and repairs, which could be higher than anticipated due to the financial constraints of many residents in the area.
However, these risks are balanced by the high concentration of renters in ZIP 38018. With 38.0% of the population being renters, there is a strong likelihood of high demand for Section 8 vouchers. This high renter share indicates a robust market for subsidized housing, potentially mitigating the risks of vacancy and tenant turnover.
Verdict: Moderate risk for a first-time Section 8 landlord.
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.