Section 8 Fair Market Rent (FMR) for ZIP 45385 - 2027

Investment Score for ZIP 45385

Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)

FY 2027 Fair Market Rent Rates

Unit Size	Monthly FMR
Studio	$850
1 Bedroom	$940
2 Bedrooms	$1,160
3 Bedrooms	$1,510
4 Bedrooms	$1,650
5 Bedrooms	$1,914
6 Bedrooms	$2,144
7 Bedrooms	$2,316
8 Bedrooms	$2,432

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$940	$99,844	0.94%	C
2BR	$1,160	$159,238	0.73%	D
3BR	$1,510	$230,819	0.65%	D
4BR	$1,650	$395,723	0.42%	F
5BR	$1,914	$556,831	0.34%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 45385 (Xenia, OH) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 45385 is set by HUD for 2026 as follows: - 0BR: $870 - 1BR: $940 - 2BR: $1190 (18.7% of median income) - 3BR: $1540 - 4BR: $1700 To understand how these FMRs compare to actual rents, we need to consider the price-to-FMR ratio. For a two-bedroom unit, Zillow reports a median price of $154,997, which translates to a monthly mortgage payment of approximately $729 (assuming a 30-year fixed-rate mortgage at 5%). However, the price-to-FMR ratio is 10.9x, indicating that the median home value is significantly higher than the FMR for rental units. This suggests that actual rents in the area could be higher than the FMR, potentially creating a constraint for voucher holders who can only pay up to the FMR. For instance, a voucher holder seeking a two-bedroom apartment would be limited to paying $1190 per month, but if the actual rent exceeds this amount, they would struggle to find suitable housing. The disparity between the FMR and actual rents highlights a potential challenge for renters using Section 8 vouchers, as they may face difficulty securing housing that meets their needs within the voucher limits. #### Affordability & Renter Profile In ZIP code 45385, 27.7% of the population are renters, indicating a moderate rental market. With a median household income of $76,564, the affordability of housing is a critical consideration. The FMR for a two-bedroom unit represents 18.7% of the median income, which is relatively affordable. However, given the occupancy rate of 92.9%, it suggests that the market is fairly tight, with limited availability of rental units. The high occupancy rate implies that there is strong demand for housing, which could drive up rents. Given that 27.7% of the population are renters, it also indicates a significant portion of the community relies on rental properties. These renters likely include families, young professionals, and students, all of whom may benefit from the Section 8 program. However, the tight market conditions mean that finding affordable housing could be challenging, especially for those relying solely on voucher assistance. #### Investor Angle From an investor perspective, the ZIP code 45385 presents both opportunities and challenges. The FMR for a two-bedroom unit is $1190, which is lower than the median home value of $154,997. However, the price-to-FMR ratio of 10.9x suggests that the median home value is significantly higher than the typical rental rates. This could indicate that the market is overvalued for rental purposes, making it difficult for investors to achieve positive cash flow based solely on FMR. To determine if the ZIP code is cash-flow positive at FMR, we need to consider the typical operating expenses and mortgage payments. Assuming an average operating expense of 50% of the gross rent and a mortgage payment of $729 (as calculated earlier), the net cash flow would be: \[ \text{Net Cash Flow} = \text{Gross Rent} - (\text{Operating Expenses} + \text{Mortgage Payment}) \] For a two-bedroom unit at $1190 FMR: \[ \text{Operating Expenses} = 0.5 \times 1190 = 595 \] \[ \text{Net Cash Flow} = 1190 - (595 + 729) = 1190 - 1324 = -134 \] This calculation shows that the net cash flow would be negative at $134 per month, suggesting that the ZIP code may not be cash-flow positive at FMR levels. Additionally, the high price-to-FMR ratio indicates that the investment grade might be lower due to the mismatch between property values and rental income. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units such as one-bedroom apartments. The FMR for a one-bedroom unit is $940, which is still below the median home value. While the cash flow might still be negative, the gap is smaller compared to larger units. For example, the net cash flow for a one-bedroom unit would be: \[ \text{Operating Expenses} = 0.5 \times 940 = 470 \] \[ \text{Net Cash Flow} = 940 - (470 + 729) = 940 - 1199 = -259 \] Although this is still negative, it provides a better opportunity for positive cash flow once the property value adjusts to more realistic rental rates. 2. **Consider Long-Term Appreciation**: Despite the negative cash flow, investors might still find value in the long-term appreciation of property values. If the median home value continues to rise, the eventual resale value could provide substantial returns. Investors should conduct thorough due diligence on the local real estate trends and consider the potential for future increases in rental rates and property values. 3. **Explore Government Programs**: Investors should explore government programs that offer additional subsidies or incentives for Section 8 properties. These programs can help offset the negative cash flow and make the investment more viable. Additionally, working closely with local housing authorities to understand the dynamics of the Section 8 program in Xenia could provide insights into how to maximize the benefits of the program. #### Bottom Line Based on the analysis, the recommendation for Section 8-focused investors in ZIP code 45385 is to **skip** this market. The high price-to-FMR ratio and negative cash flow suggest that the investment would not be profitable in the short term. Additionally, the tight market conditions and strong demand for housing imply that actual rents are likely to exceed the FMR, further complicating the ability to secure tenants using Section 8 vouchers. While there might be opportunities for long-term appreciation, the immediate financial constraints make this ZIP code less attractive for investors looking to generate positive cash flow through Section 8 properties.

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.