Location: Smith County, TN | Metro: Smith County, TN HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $780 |
| 1 Bedroom | $790 |
| 2 Bedrooms | $1,030 |
| 3 Bedrooms | $1,260 |
| 4 Bedrooms | $1,350 |
| 5 Bedrooms | $1,566 |
| 6 Bedrooms | $1,754 |
| 7 Bedrooms | $1,894 |
| 8 Bedrooms | $1,989 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,260 | $331,923 | 0.38% | F |
U.S. Census Bureau data (2024)
ZIP 38563, located in Smith County, Tennessee, presents a strategic opportunity for landlords and small-portfolio investors within a Section 8 portfolio strategy. This area serves primarily as a cash-flow anchor due to the significant spread between the Fair Market Rent (FMR) and the actual market rent.
The FMR for ZIP 38563 in fiscal year 2024 is set at $1030. In contrast, the current market rent stands at $855. This discrepancy means that landlords participating in the Section 8 program can expect higher rental income compared to market rates, thereby securing a stable and predictable cash flow. The FMR provides a guaranteed minimum rent, which is particularly advantageous in areas where market rents are lower, ensuring that properties are not left vacant and reducing financial risk.
Additionally, the median home value in ZIP 38563 is $304,012. While this figure is relevant for homeownership, it does not directly impact the rental strategy for Section 8 properties. However, it does suggest a moderate housing market, which can be beneficial for maintaining property values and attracting tenants who might otherwise struggle to find affordable housing.
The 32.6% renter share indicates that a considerable portion of the population in ZIP 38563 relies on renting, making it a viable market for rental properties. With a median income of $50,313, many residents likely qualify for the Section 8 program, further supporting the demand for subsidized housing units.
In summary, ZIP 38563 should be considered a cash-flow anchor within a Section 8 portfolio strategy. The guaranteed higher rental income through the FMR, coupled with a substantial renter share and median income levels that support program eligibility, makes this area an attractive choice for landlords seeking consistent and reliable returns on their investment.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.