Location: Overton County, TN | Metro: Fentress County, TN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $760 |
| 1 Bedroom | $810 |
| 2 Bedrooms | $1,000 |
| 3 Bedrooms | $1,230 |
| 4 Bedrooms | $1,430 |
| 5 Bedrooms | $1,659 |
| 6 Bedrooms | $1,858 |
| 7 Bedrooms | $2,007 |
| 8 Bedrooms | $2,107 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 38554 reveals some interesting insights. To begin, let's annualize the Fair Market Rent (FMR) for a two-bedroom apartment at $930 per month, based on the data for fiscal year 2026 in the metropolitan area. This translates to an annual rent income of $11,160.
Given the median home value in ZIP 38554 is $213,113, we can calculate the implied gross yield by dividing the annual rent income by the median home value. In this case, the gross yield is approximately 5.24%. This calculation assumes that the property is valued similarly to the median home value and that it can be rented out at the FMR rate.
However, the market rent is listed as N/A, indicating insufficient data to provide a reliable figure. If we were to assume that the market rent aligns closely with the FMR, the gross yield would remain at 5.24%. But without a specific market rent, this becomes speculative.
Considering the 22.5% renter density in the area, it suggests that a significant portion of the population does not own homes, potentially increasing demand for rental properties. However, the lack of days-on-market (DOM) data means we cannot assess how quickly properties are being leased, which could affect the reliability of the FMR-based gross yield.
The implied gross yield of 5.24%, derived from the FMR, is a concrete figure that can serve as a benchmark for potential investment returns. However, it is important to note that this figure is based on government-set rates and may not reflect the actual market conditions. For instance, if the market rent significantly exceeds the FMR, the gross yield would be higher, making the investment more attractive. Conversely, if the market rent is lower, the yield would decrease, impacting the profitability.
In conclusion, while the FMR provides a useful starting point for calculating the gross yield, the absence of market rent data makes it difficult to determine the true potential return on investment for properties in ZIP 38554. Investors should conduct further research into local rental markets to refine their analysis.
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.