Location: Memphis, TN | Metro: Memphis, TN-MS-AR HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $840 |
| 1 Bedroom | $910 |
| 2 Bedrooms | $1,000 |
| 3 Bedrooms | $1,310 |
| 4 Bedrooms | $1,510 |
| 5 Bedrooms | $1,752 |
| 6 Bedrooms | $1,962 |
| 7 Bedrooms | $2,119 |
| 8 Bedrooms | $2,225 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 72339 reveals a complex picture when it comes to Section 8 cap rates and market rents. For a two-bedroom unit, the Fair Market Rent (FMR) for fiscal year 2024 is set at $930 per month. This figure annualizes to $11,160. However, the median home value and the market rent for the area are not available, which makes it challenging to derive an exact gross yield for the market rent scenario.
To calculate the implied gross yield using the FMR, we must first assume a purchase price based on the median home value. Since the median home value is not available, let's consider a hypothetical scenario where the median home value is around the national average for a similar-sized property, approximately $250,000. With a monthly rent of $930, the annual rent would be $11,160. The implied gross yield in this case would be 4.46% ($11,160 / $250,000).
In the absence of market rent data, we cannot provide a direct comparison. However, it is worth noting that the national average gross yield for rental properties can range from 5% to 10%, depending on the location and property type. Given the limited data, it is difficult to determine if the Section 8 scenario is more or less attractive compared to the market rent scenario.
The renter density in ZIP 72339 stands at 25.9%, indicating a moderate demand for rental properties. Additionally, the Days on Market (DOM) data is not available, which typically helps in understanding how quickly properties are rented out. Without this information, we cannot fully assess the liquidity and turnover potential of rental properties in this area.
Based on the available data, the Section 8 program offers a stable, albeit lower, gross yield compared to typical market yields. Landlords should weigh the benefits of guaranteed income through Section 8 against the potential for higher yields in a competitive market rental environment. The stability provided by Section 8 could be particularly appealing in areas with moderate renter density and uncertain market conditions.
For a more detailed analysis, landlords and investors should consult local real estate experts to understand the specific dynamics of ZIP 72339 and how they might impact investment decisions. It's also advisable to review the latest Section 8 payment standards and any changes in local rental markets that could affect long-term profitability.
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.