Section 8 Fair Market Rent (FMR) for ZIP 38128 - 2027

Investment Score for ZIP 38128

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	$1,140
1 Bedroom	$1,240
2 Bedrooms	$1,350
3 Bedrooms	$1,780
4 Bedrooms	$2,060
5 Bedrooms	$2,390
6 Bedrooms	$2,677
7 Bedrooms	$2,891
8 Bedrooms	$3,036

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$1,240	$61,018	2.03%	A+
2BR	$1,350	$87,862	1.54%	A+
3BR	$1,780	$143,062	1.24%	A
4BR	$2,060	$192,076	1.07%	B
5BR	$2,390	$226,102	1.06%	B

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 38128 (Memphis, TN) #### Section 8 Voucher Dynamics In ZIP code 38128, the Fair Market Rent (FMR) for a two-bedroom unit is set at $1350, which represents 34.0% of the median household income of $47,645. This indicates that the rent is relatively affordable for the average household in the area. However, the actual rental market price for a two-bedroom unit, according to Zillow, is $90,105, which translates to a monthly rent of approximately $750 if we assume a standard 12-month lease. The price-to-FMR ratio of 5.6x suggests that the actual market price is significantly lower than the FMR, indicating that landlords who accept Section 8 vouchers might be able to charge higher rents compared to the market average but still within the FMR limits. The constraints for voucher holders are primarily related to the maximum allowable rent they can pay. For example, a voucher holder in a two-bedroom unit would have to find a property where the landlord is willing to accept $1350 per month, even though the market rate is much lower. This could limit their options, especially if landlords prefer to rent at market rates rather than the higher FMR rates. #### Affordability & Renter Profile ZIP code 38128 has a high percentage of renters at 57.9%, indicating a significant demand for rental properties. The occupancy rate of 87.8% suggests that the housing stock is largely occupied, pointing towards a tight rental market. Given the median household income of $47,645, the majority of residents likely fall into the low to moderate-income bracket. The fact that the FMR for a two-bedroom unit is only 34.0% of the median income further supports the idea that many residents are financially capable of renting a two-bedroom unit, although the high percentage of renters suggests that there is a substantial population relying on rental housing. The tight market conditions imply that there is little excess supply of rental units, which could lead to upward pressure on rents. However, the actual market price being significantly below the FMR suggests that there is room for landlords to increase rents without pricing out most tenants. This dynamic creates a competitive environment for both tenants and landlords, with voucher holders potentially having fewer options due to the higher rent limits. #### Investor Angle From an investor perspective, the ZIP code 38128 presents an opportunity to generate positive cash flow by targeting the Section 8 voucher market. With the FMR for a two-bedroom unit at $1350, landlords can potentially charge higher rents compared to the market average of around $750. This means that investors who purchase properties at the median Zillow price of $90,105 and rent them out at the FMR can achieve a higher rental yield. To determine the investment grade, we need to consider factors such as vacancy rates, maintenance costs, and the overall financial health of the neighborhood. Given the high occupancy rate of 87.8%, the risk of vacancy is relatively low. Additionally, the high percentage of renters and the tight market suggest strong demand for rental properties, making it a favorable investment environment. #### Specific Actionable Insights 1. **Target Section 8 Vouchers**: Investors should focus on acquiring properties that can be rented out at the FMR rates. For instance, a two-bedroom unit priced at $1350 per month would be attractive to voucher holders and could provide a steady stream of income. This strategy leverages the higher FMR rates while ensuring a stable tenant base. 2. **Consider Property Upgrades**: Since the actual market price is significantly lower than the FMR, investors might consider upgrading properties to justify higher rents. For example, a two-bedroom unit currently renting for $750 could be renovated to command closer to the FMR rate of $1350. This approach would require an initial investment but could result in better cash flow and higher returns over time. 3. **Monitor Local Trends**: Investors should keep a close eye on local trends, particularly changes in the rental market and any adjustments to the FMR. If the market price starts to rise closer to the FMR, the attractiveness of Section 8 vouchers might diminish. Conversely, if the FMR increases, it could create additional opportunities for landlords to charge higher rents. #### Bottom Line For Section 8-focused investors, ZIP code 38128 presents a favorable environment to invest in rental properties. The high percentage of renters and tight market conditions indicate strong demand, while the significant gap between the actual market price and the FMR suggests potential for positive cash flow. Therefore, the recommendation is to **buy** properties in this ZIP code, particularly those that can be rented out at the FMR rates. This strategy can help investors capitalize on the existing demand and benefit from the higher rent limits associated with Section 8 vouchers.

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.