Location: Putnam County, TN | Metro: Smith County, TN HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $750 |
| 1 Bedroom | $810 |
| 2 Bedrooms | $1,030 |
| 3 Bedrooms | $1,360 |
| 4 Bedrooms | $1,440 |
| 5 Bedrooms | $1,670 |
| 6 Bedrooms | $1,870 |
| 7 Bedrooms | $2,020 |
| 8 Bedrooms | $2,121 |
U.S. Census Bureau data (2024)
A skeptical investor considering ZIP 38548 might raise several valid concerns regarding the feasibility of investing in rental properties. Here are some common objections and the data to address them.
Objection 1: Will Fair Market Rent (FMR) of $910 cover the mortgage on a $302,425 home?
To evaluate this, we need to look at current mortgage rates and the potential monthly mortgage payment. According to recent data, the average 30-year fixed mortgage rate is around 6.8%. Using this rate, the monthly mortgage payment on a $302,425 home would be approximately $1,925, assuming a 20% down payment. At first glance, this seems higher than the FMR of $910. However, it's important to consider that the FMR is set to ensure affordability and does not necessarily reflect the maximum rent one could charge. In practice, landlords often aim to rent properties at slightly above the FMR to ensure profitability. Additionally, property values and mortgage rates can fluctuate, so it's crucial to monitor these trends closely.
Objection 2: Is there enough renter demand at 6.8%?
The data suggests that ZIP 38548 has a significant number of vacant households, indicating potential demand for rental properties. However, the 6.8% figure likely refers to the mortgage rate rather than the vacancy rate. Vacancy rates are a better indicator of demand. Unfortunately, the specific vacancy rate for ZIP 38548 is not provided in the available data. To get a clearer picture, an investor should research local rental listings and occupancy rates to gauge demand accurately.
Objection 3: Will vouchers keep pace with $813 market rents?
The Housing Choice Voucher program aims to subsidize rents up to a certain level, typically close to the FMR. With an FMR of $910 and market rents at $813, vouchers are likely to cover the majority of rental costs. However, the exact amount covered by vouchers can vary based on individual tenant income and other factors. It's also worth noting that voucher recipients must find their own housing, and landlords are not required to accept them. Nonetheless, given the relatively low market rents compared to the FMR, the likelihood of finding tenants with vouchers is high, and the subsidy should generally be sufficient to cover most of the rent.
In summary, while the FMR may not fully cover the mortgage payment, there is potential for charging slightly above the FMR to ensure profitability. Demand for rental properties appears to exist, but the precise vacancy rate needs further investigation. Lastly, vouchers should keep pace with market rents, providing a reliable source of income for landlords willing to participate in the program.
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.