Location: Decatur County, TN | Metro: Benton County, TN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $770 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,340 |
| 4 Bedrooms | $1,450 |
| 5 Bedrooms | $1,682 |
| 6 Bedrooms | $1,884 |
| 7 Bedrooms | $2,035 |
| 8 Bedrooms | $2,137 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 38380 provides a critical snapshot for landlords and small-portfolio investors looking to understand the potential returns from properties in this area. Based on the Fair Market Rent (FMR) for a two-bedroom apartment set at $940 per month for fiscal year 2026, and the median home value at $168,832, we can derive some key insights.
First, let's consider the annualized Section 8 rent scenario. With a monthly rent of $940, the annual income would be $11,280. Dividing this by the median home value gives an implied gross yield of approximately 6.7%. This calculation assumes that the property is being rented out under the Section 8 program, which caps rent at the FMR rate.
Second, we need to address the market rent scenario. However, since the market rent figure is not available, we cannot provide a direct comparison. The absence of market rent data makes it challenging to assess the true potential of rental income beyond the Section 8 program. Without this information, investors must rely on local real estate trends and consult with local agents to estimate market rents.
Given the 9.8% renter density in ZIP 38380, it is important to note that the demand for rental properties, including those under the Section 8 program, is relatively low compared to areas with higher renter populations. This suggests that the Section 8 scenario, while providing a stable and government-backed income stream, might not be as attractive as other investment opportunities where rental demand is higher.
The Days on Market (DOM) figure is also not available, which is crucial for understanding how quickly properties can be leased. A high DOM could indicate difficulties in finding tenants, which would impact the overall profitability and cap-rate of the investment. Conversely, a low DOM would suggest strong demand and potentially quicker leasing times, even if the gross yield is lower.
In conclusion, while the Section 8 program offers a guaranteed gross yield of about 6.7%, the lack of market rent data and the relatively low renter density in ZIP 38380 means that this scenario should be considered cautiously. Investors should seek additional local data to make informed decisions about the potential for higher yields through market rents, despite the challenges posed by the current rental environment.
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.