Location: Panola County, MS | Metro: Tate County, MS 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 | $890 |
| 1 Bedroom | $970 |
| 2 Bedrooms | $1,070 |
| 3 Bedrooms | $1,320 |
| 4 Bedrooms | $1,540 |
| 5 Bedrooms | $1,786 |
| 6 Bedrooms | $2,000 |
| 7 Bedrooms | $2,160 |
| 8 Bedrooms | $2,268 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,070 | $177,240 | 0.6% | D |
| 3BR | $1,320 | $242,925 | 0.54% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 38665 in Sarah, MS, reveals a significant disparity between the federal market rent (FMR) and the actual market rent when compared to the median home value.
Based on the provided data, the annualized Federal Market Rent (FMR) for a two-bedroom unit in ZIP 38665 for FY 2024 is $1390. This translates into an implied gross yield of approximately 7.6% when calculated against the median home value of $235,069. The calculation is straightforward: ($1390 * 12) / $235,069 = 7.6%. However, this scenario is less likely to be realized due to the limited number of units that can command such high rents under the Section 8 program.
In contrast, the Census ACS reports the market rent for a two-bedroom unit at $920. Using this figure, the implied gross yield drops significantly to about 5.0%. The calculation here is: ($920 * 12) / $235,069 = 5.0%. This lower gross yield is more reflective of the rental market conditions in Sarah, MS, considering the 28.5% renter density, which suggests a substantial portion of the population relies on affordable housing options.
The N/A-day DOM (Days on Market) indicates that there is no specific data available regarding how quickly properties are rented out. However, given the higher proportion of renters who might qualify for Section 8, it's reasonable to assume that the lower market rent of $920 is more representative of the current rental environment. Landlords and small-portfolio investors should prepare for yields closer to 5.0%, rather than the higher 7.6% suggested by the FMR, unless they can secure a higher percentage of non-Section 8 tenants willing to pay the FMR.
To summarize, while the theoretical gross yield based on FMR is 7.6%, the practical gross yield based on the market rent is 5.0%. Given the local conditions, the latter is more likely to be achieved by most investors in the area.
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.