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 | $1,220 |
| 1 Bedroom | $1,330 |
| 2 Bedrooms | $1,450 |
| 3 Bedrooms | $1,910 |
| 4 Bedrooms | $2,210 |
| 5 Bedrooms | $2,564 |
| 6 Bedrooms | $2,872 |
| 7 Bedrooms | $3,102 |
| 8 Bedrooms | $3,257 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,330 | $117,276 | 1.13% | B |
| 2BR | $1,450 | $193,836 | 0.75% | D |
| 3BR | $1,910 | $278,081 | 0.69% | D |
| 4BR | $2,210 | $389,517 | 0.57% | F |
| 5BR | $2,564 | $439,901 | 0.58% | F |
U.S. Census Bureau data (2024)
The ZIP code 38104 is situated in the heart of Memphis, Tennessee, representing a densely populated urban area with a significant portion of residents as renters. With a total population of 22,634, where 62.0% of the inhabitants are tenants, it is clear that this neighborhood has a strong rental market. The median household income in the area is $58,117, indicating a middle-class community. The median home value stands at $253,011, reflecting a stable housing market.
Moving into the specifics of the rental market, the Fair Market Rent (FMR) for ZIP 38104 as of the fiscal year 2024 is set at $1,400. This figure represents the maximum allowable rent for units participating in the Section 8 program. In contrast, the market rent, known as ZORI (Zillow Observed Rent Index), is significantly lower at $1,107. This discrepancy between FMR and market rent presents an opportunity for landlords and investors who can capitalize on the higher allowable rent through the Section 8 program.
The practical implications of these figures for potential investors hinge on their investment strategy. For those seeking a hands-off approach, ZIP 38104 is a viable option due to the relatively high FMR compared to the market rent. This means that landlords can receive a guaranteed income level that exceeds the typical market rates without the need for active tenant management. However, for hands-on investors looking to add value, the lower market rent suggests that there is room for improvement in property quality and services to justify higher rents beyond the market average but still below the FMR cap.
In summary, ZIP 38104 offers a robust rental market driven by a high percentage of renters and a middle-class income base. The economic landscape, characterized by a gap between FMR and market rent, caters well to both passive and active investors. A hands-off operator can benefit from the guaranteed higher rent through Section 8, while a value-add buyer has the potential to enhance properties and command premium rents that approach the FMR threshold.
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.