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 | $990 |
| 1 Bedroom | $1,080 |
| 2 Bedrooms | $1,180 |
| 3 Bedrooms | $1,560 |
| 4 Bedrooms | $1,800 |
| 5 Bedrooms | $2,088 |
| 6 Bedrooms | $2,339 |
| 7 Bedrooms | $2,526 |
| 8 Bedrooms | $2,652 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,180 | $68,520 | 1.72% | A+ |
| 3BR | $1,560 | $90,113 | 1.73% | A+ |
| 4BR | $1,800 | $119,410 | 1.51% | A+ |
| 5BR | $2,088 | $147,248 | 1.42% | A |
U.S. Census Bureau data (2024)
The analysis of ZIP code 38127 in Memphis, TN, reveals mixed prospects for landlords and small-portfolio investors. First, let's address whether the rent math works. The Fair Market Rent (FMR) set at $1160 for the fiscal year 2024 is higher than the current market rent, which stands at $1,076 (ZORI). This indicates that landlords can potentially charge rents slightly above the market average but should be cautious about setting rents too high, as it could deter tenants.
Moving on to the affordability of acquisitions, the median home value in ZIP 38127 is $90,070. With an average Days on Market (DOM) of 65 days and a price-cut share of just 0.2%, it suggests that homes are selling relatively quickly without significant discounts. This points to a competitive market where acquiring properties might require paying closer to asking prices, indicating that while acquisition is possible, it may not offer deep discounts.
Tenant demand is strong in ZIP 38127, with a population of 39,541 and 57.8% of residents being renters. This high renter share supports a robust market for rental properties, ensuring a steady stream of potential tenants. Landlords can leverage this demand to maintain occupancy rates and potentially negotiate favorable lease terms.
In conclusion, while the rent math slightly favors landlords due to the higher FMR compared to the ZORI, the acquisition costs remain relatively high with quick sales and minimal price reductions. However, the strong tenant demand provides a solid foundation for maintaining a successful rental portfolio in ZIP 38127. Landlords should focus on managing costs and optimizing property values to ensure profitability.
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.