Section 8 Fair Market Rent (FMR) for ZIP 38111 - 2027

Investment Score for ZIP 38111

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	$1,040
1 Bedroom	$1,130
2 Bedrooms	$1,240
3 Bedrooms	$1,640
4 Bedrooms	$1,890
5 Bedrooms	$2,192
6 Bedrooms	$2,455
7 Bedrooms	$2,651
8 Bedrooms	$2,784

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$1,130	$82,911	1.36%	A
2BR	$1,240	$100,394	1.24%	A
3BR	$1,640	$141,435	1.16%	B
4BR	$1,890	$286,222	0.66%	D
5BR	$2,192	$723,968	0.3%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 38111 (Memphis, TN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 38111 in Memphis, TN, is set by HUD for 2026 as follows: - 0BR: $1030 - 1BR: $1120 - 2BR: $1240 - 3BR: $1640 - 4BR: $1910 These figures represent the maximum rent that a Section 8 voucher holder can pay. However, the actual rents in the area may be higher, leading to potential constraints for voucher holders. For instance, the Zillow median price for a 2BR property in 38111 is $100,570, which translates to a monthly mortgage payment of approximately $558 based on a 30-year fixed-rate mortgage at 4%. Adding property taxes, insurance, and maintenance costs, the total monthly cost for a landlord could easily exceed the FMR cap. This means that landlords who rely solely on Section 8 vouchers might struggle to cover their expenses, especially if they have to compete with market rents. #### Affordability & Renter Profile ZIP code 38111 has a significant renter population, with 55.8% of households being renters. The occupancy rate stands at 88.8%, indicating a fairly tight rental market. Given that the median household income is $52,589, the affordability of housing becomes a critical issue. The 2BR FMR of $1240 represents 28.3% of the median income, which is relatively high but still manageable for some households. However, the price-to-FMR ratio of 6.8x suggests that market rents are significantly higher than the FMR, making it difficult for low-income households to find affordable housing without assistance. The high renter percentage and occupancy rate indicate that there is a strong demand for rental properties in this area. This demand is likely driven by the significant portion of the population that relies on rental housing due to lower median incomes. The tight market conditions mean that there is little excess supply, and landlords have a fair degree of pricing power. #### Investor Angle From an investor perspective, the ZIP code 38111 presents both opportunities and challenges. The FMR caps provide a baseline for what voucher holders can afford, but the actual rents in the market are much higher. To determine whether this ZIP code is cash-flow positive at FMR, we need to consider the typical operating costs for a landlord. Assuming a 2BR unit with a Zillow median price of $100,570, the monthly mortgage payment would be around $558. Adding property taxes (assuming 1.5% of the home value), insurance (around $100 per month), and maintenance costs (typically 1% of the home value), the total monthly cost would be: - Mortgage Payment: $558 - Property Taxes: $100,570 * 0.015 = $151 - Insurance: $100 - Maintenance: $100,570 * 0.01 = $101 Total Monthly Cost: $558 + $151 + $100 + $101 = $910 Given the FMR for a 2BR unit is $1240, the net cash flow would be $1240 - $910 = $330 per month. This indicates that the ZIP code could be cash-flow positive for investors who are willing to accept Section 8 vouchers. However, the challenge lies in the fact that the market rents are much higher, and landlords might be hesitant to take on Section 8 tenants if they can get higher rents from other sources. The investment grade for this ZIP code is moderate. While the demand for rental properties is strong, the constraints imposed by the FMR caps could limit profitability. Investors should carefully weigh the benefits of stable, government-backed rental income against the potential for higher market rents. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, smaller units such as 0BR and 1BR might be more attractive for Section 8 voucher holders. These units are less expensive to maintain and operate, potentially offering better returns relative to the FMR caps. For example, the FMR for a 0BR unit is $1030, while the total monthly cost for a similar-sized unit might be lower, improving the cash flow. 2. **Consider Renovation Projects**: Properties that require renovation might offer better opportunities for Section 8-focused investors. By acquiring a distressed property and renovating it to meet the FMR requirements, investors can potentially achieve a higher return on investment. The median price of $100,570 for a 2BR unit suggests that there is room for profit if the acquisition and renovation costs are managed effectively. 3. **Engage with Local Real Estate Agencies**: Partnering with local real estate agencies that specialize in Section 8 rentals can help navigate the complexities of the program. These agencies often have experience in dealing with the administrative aspects of Section 8 and can provide valuable insights into the local market dynamics. #### Bottom Line For Section 8-focused investors, ZIP code 38111 presents a mixed picture. While the demand for rental properties is strong and the FMR caps provide a stable source of income, the high price-to-FMR ratio poses a significant challenge. The recommendation is to **Hold** investments in this ZIP code, focusing on smaller units and properties that can be renovated to meet FMR requirements. This strategy can help maximize returns while still providing affordable housing options for low-income residents. In summary, the key points are: - Strong demand for rental properties with a 55.8% renter population and 88.8% occupancy rate. - High price-to-FMR ratio (6.8x) indicating that market rents are well above the FMR caps. - Potential for cash-flow positive investments, particularly in smaller units and renovated properties. - Moderate investment grade due to the balance between strong demand and FMR constraints. This ZIP code is worth considering for investors who are prepared to work within the limitations of the Section 8 program and can leverage local market knowledge to optimize their investments.

Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.