Location: Carroll County, TN | Metro: Carroll County, TN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $760 |
| 1 Bedroom | $790 |
| 2 Bedrooms | $1,000 |
| 3 Bedrooms | $1,230 |
| 4 Bedrooms | $1,560 |
| 5 Bedrooms | $1,810 |
| 6 Bedrooms | $2,027 |
| 7 Bedrooms | $2,189 |
| 8 Bedrooms | $2,298 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 38342 reveals a notable disparity between government-subsidized rental income and market rents, providing insight into potential investment strategies for landlords and small-portfolio investors.
In ZIP 38342, the annualized Fair Market Rent (FMR) for a two-bedroom apartment under the Section 8 program is set at $930 per month for fiscal year 2026. This translates to an annual rental income of $11,160. In contrast, the market rent for a similar property, based on Census ACS data, stands at $556 per month, equating to an annual rental income of $6,672.
To determine the gross yield for each scenario, we use the median home value of $151,880. The implied gross yield for the Section 8 scenario is calculated as follows: $11,160 divided by $151,880 equals approximately 7.35%. For the market rent scenario, the gross yield is $6,672 divided by $151,880, which comes out to about 4.40%.
The higher gross yield in the Section 8 scenario suggests that it offers better returns compared to market rents. However, the decision to pursue either option should also consider the 30.4% renter density in the area. This figure indicates that while there is a significant portion of renters, a substantial majority of residents might still prefer homeownership, which could affect demand for rental properties.
The absence of Days on Market (DOM) data means we cannot directly assess how quickly properties are rented out. However, the higher gross yield from the Section 8 program can be attractive to investors seeking stable, government-backed income. Conversely, market rents provide lower yields but may offer flexibility in terms of tenant selection and lease conditions.
Given these figures, the Section 8 scenario presents a more realistic option for achieving higher gross yields, especially considering the stability and predictability of government subsidies. Nevertheless, investors must weigh this against the local rental market dynamics and their own risk tolerance.
Data Sources: FMR data from HUD (2027). 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.