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 | $1,570 |
| 1 Bedroom | $1,710 |
| 2 Bedrooms | $1,870 |
| 3 Bedrooms | $2,470 |
| 4 Bedrooms | $2,850 |
| 5 Bedrooms | $3,306 |
| 6 Bedrooms | $3,703 |
| 7 Bedrooms | $3,999 |
| 8 Bedrooms | $4,199 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,870 | $230,878 | 0.81% | C |
| 3BR | $2,470 | $359,757 | 0.69% | D |
| 4BR | $2,850 | $443,499 | 0.64% | D |
| 5BR | $3,306 | $624,258 | 0.53% | F |
U.S. Census Bureau data (2024)
The market analysis for Section 8 investors in ZIP code 38138, Germantown, TN, reveals a challenging but manageable environment for cash flow. The HUD Fair Market Rent (FMR) for the area in fiscal year 2024 is set at $1810, while the market rent, as measured by Zillow's ZORI index, stands at $2,366. This indicates that voucher tenants will only achieve marginal cash flow at the FMR rate, meaning landlords must either accept lower profits or seek higher-end units to cover the gap between the voucher amount and the market rent.
To derive the rent-to-price ratio, we use the median home value of $436,253. At the market rent of $2,366, the annual rent is approximately $28,392. Dividing this by the median home value yields a rent-to-price ratio of roughly 0.0065 or 0.65%. This ratio suggests that rental income alone may not fully justify the purchase price of homes in the area, indicating that appreciation or stability might be more compelling investment angles.
The median days on market (DOM) for listings is 26 days, and the share of homes that have been listed with a price cut is 0.2%. These figures point to a relatively stable housing market where homes sell quickly and without significant price reductions. This stability could be beneficial for investors looking to minimize holding costs and avoid the need to reduce asking prices, which would affect profitability.
In conclusion, the strongest angle for Section 8 investors in ZIP 38138 is likely stability, given the quick sales and minimal price adjustments. While cash flow is marginal at the HUD FMR, the robustness of the local housing market provides a solid foundation for long-term investment strategies.
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.