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 | $880 |
| 1 Bedroom | $960 |
| 2 Bedrooms | $1,050 |
| 3 Bedrooms | $1,390 |
| 4 Bedrooms | $1,600 |
| 5 Bedrooms | $1,856 |
| 6 Bedrooms | $2,079 |
| 7 Bedrooms | $2,245 |
| 8 Bedrooms | $2,357 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,050 | $71,743 | 1.46% | A |
| 3BR | $1,390 | $147,945 | 0.94% | C |
| 4BR | $1,600 | $319,015 | 0.5% | F |
| 5BR | $1,856 | $457,128 | 0.41% | F |
U.S. Census Bureau data (2024)
The ZIP code 38112 is situated in the southern part of Memphis, TN, representing a diverse urban neighborhood with a population of 16,809 residents. Approximately 48.2% of these residents are renters, indicating a significant demand for rental properties. The median household income in this area stands at $55,207, which is slightly below the national average but still reflective of a stable economic base. The median home value in ZIP 38112 is $126,986, suggesting that homeownership is accessible to many, though a considerable portion of the population opts for renting.
When it comes to rent economics, the Fair Market Rent (FMR) for ZIP 38112 as of the fiscal year 2024 is set at $1,140, while the market rent, measured by Zillow's ZORI index, is $1,246. This indicates that the market rent slightly exceeds the FMR, providing a modest premium for landlords who can manage their properties efficiently to meet the needs of tenants and the requirements of the Section 8 program.
Given the demographic and economic characteristics of ZIP 38112, it is well-suited for both hands-off voucher operators and hands-on value-add buyers. For hands-off operators, the presence of a substantial number of renters and a relatively high percentage of participation in the Section 8 program makes it an attractive option. The stability of the income provided by the voucher program can ensure consistent cash flow without the need for extensive property management.
On the other hand, hands-on value-add buyers could find opportunities to enhance the value of their investments by improving properties to command rents closer to the market rate. Given the slight gap between FMR and market rent, there is potential to increase profitability through strategic upgrades and active management, while still serving the needs of low-income families.
In summary, ZIP 38112 offers a balanced environment for Section 8 investment, with a mix of stable demand and potential for value enhancement. Whether pursuing a passive or active strategy, landlords and small-portfolio investors can expect solid returns and the opportunity to contribute positively to the community.
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.