Location: Smith County, TN | Metro: Smith County, TN HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $760 |
| 1 Bedroom | $760 |
| 2 Bedrooms | $1,000 |
| 3 Bedrooms | $1,240 |
| 4 Bedrooms | $1,310 |
| 5 Bedrooms | $1,520 |
| 6 Bedrooms | $1,702 |
| 7 Bedrooms | $1,838 |
| 8 Bedrooms | $1,930 |
U.S. Census Bureau data (2024)
A skeptical investor analyzing ZIP code 38560 might raise several concerns regarding the feasibility of participating in the Section 8 housing program. Let's address these concerns directly with the available data.
Will FMR $900 (zip FY 2024) cover the mortgage on a $291,871 home?
The Fair Market Rent (FMR) for ZIP 38560 in fiscal year 2024 is set at $900. This figure represents the average monthly rent that a landlord can expect to receive from a Section 8 tenant. To determine if this will cover the mortgage on a home priced at $291,871, we must consider the interest rate and loan terms. Assuming a standard 30-year fixed-rate mortgage at an average rate of 5%, the monthly mortgage payment would be approximately $1,527. Therefore, the $900 FMR falls short of covering the mortgage payment, indicating that landlords may need additional income sources or higher occupancy rates to balance their finances.
Is there enough renter demand at 24.7%?
The rental vacancy rate in ZIP 38560 is 24.7%. This percentage suggests that there is a relatively high supply of rental units compared to the demand. However, it is important to note that the vacancy rate does not solely determine the success of rental investments. The presence of a significant number of voucher holders in the area could offset the high vacancy rate. Additionally, the rental market dynamics can vary widely depending on local economic conditions, job availability, and population trends. While the 24.7% vacancy rate may seem concerning, it is essential to analyze other factors that influence renter demand.
Will vouchers keep pace with $777 market rents?
The market rent for ZIP 38560 is reported to be $777 per month. Given that the FMR is $900, landlords who accept Section 8 vouchers should find that the payment covers the market rent adequately. However, the question of whether vouchers will keep pace with future increases in market rents remains uncertain. Historically, the FMR has adjusted annually based on changes in the rental market. Landlords should monitor these adjustments closely to ensure they continue to align with market conditions. If the FMR does not adjust to reflect rising market rents, landlords may face financial pressures or seek alternative rental opportunities.
In conclusion, while the data provides some clarity on the challenges and opportunities within ZIP 38560, certain aspects such as the adequacy of FMR to cover mortgages and the long-term stability of voucher payments require ongoing attention. Investors should conduct thorough due diligence and consider multiple factors before making investment decisions.
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.