Location: Carroll County, TN | Metro: Benton County, TN
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 | $780 |
| 1 Bedroom | $790 |
| 2 Bedrooms | $1,020 |
| 3 Bedrooms | $1,410 |
| 4 Bedrooms | $1,440 |
| 5 Bedrooms | $1,670 |
| 6 Bedrooms | $1,870 |
| 7 Bedrooms | $2,020 |
| 8 Bedrooms | $2,121 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,410 | $210,551 | 0.67% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 38320 reveals some interesting dynamics between federal market rents (FMRs) and market rents. For a two-bedroom property, the annualized FMR for FY 2026 is set at $960, while the market rent, based on Census ACS data, stands at $778 per month.
To derive the implied gross yield for both scenarios, we must first calculate the annual rental income. For the FMR scenario, the annual rental income would be $960 multiplied by 12 months, equating to $11,520. Given the median home value in ZIP 38320 is $191,321, the implied gross yield for the FMR scenario can be calculated by dividing the annual rental income by the median home value, resulting in an implied gross yield of approximately 6%. For the market rent scenario, the monthly rent of $778 translates into an annual rental income of $9,336. Using the same median home value, this yields an implied gross yield of roughly 4.9%.
The lower gross yield under the market rent scenario suggests that relying solely on market rents could result in less favorable returns for investors. However, the FMR scenario assumes a higher rent collection rate, which is not always guaranteed due to various factors such as tenant eligibility and payment schedules.
The renter density of 24.9% indicates that there is a moderate demand for rental properties in ZIP 38320, but it does not provide a complete picture of the rental market's health. The N/A-day DOM (days on market) further complicates the analysis, as it does not give us insight into how quickly properties are rented out, which is crucial for understanding vacancy rates and cash flow stability.
In conclusion, while the FMR scenario offers a higher gross yield of about 6%, the actual performance may be influenced by the ability to maintain full occupancy and the efficiency of rent collection. The market rent scenario, with a gross yield of around 4.9%, reflects a more conservative estimate but may better align with the realities of the local rental market. Investors should consider these figures alongside other factors such as property management costs, maintenance expenses, and local economic conditions to make informed decisions.
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.