Location: Phoenix-Mesa-Chandler, AZ | Metro: Phoenix-Mesa-Chandler, AZ MSA
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 | $1,240 |
| 1 Bedroom | $1,330 |
| 2 Bedrooms | $1,550 |
| 3 Bedrooms | $2,040 |
| 4 Bedrooms | $2,270 |
| 5 Bedrooms | $2,633 |
| 6 Bedrooms | $2,949 |
| 7 Bedrooms | $3,185 |
| 8 Bedrooms | $3,344 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,550 | $304,121 | 0.51% | F |
| 3BR | $2,040 | $411,786 | 0.5% | F |
| 4BR | $2,270 | $510,918 | 0.44% | F |
| 5BR | $2,633 | $776,701 | 0.34% | F |
U.S. Census Bureau data (2024)
To determine if a landlord should buy in ZIP code 85023 (Phoenix, AZ) for Section 8 investments, follow this decision tree:
1) Does the Fair Market Rent (FMR) of $1690 cover the debt service on a $420,033 property?
Yes. The FMR of $1690 is sufficient to cover the debt service on a property priced at $420,033. Assuming an average mortgage rate, this rent amount can support the monthly payments. Proceed to the next question.
No. If the FMR does not cover the debt service, purchasing a property in this ZIP code for Section 8 would be financially unwise. The landlord would face a shortfall each month, making the investment unsustainable.
It depends. This scenario applies if the landlord plans to finance the purchase with a loan that has a lower interest rate or a shorter term, potentially reducing the debt service to a level where the FMR of $1690 could suffice. However, this is less common and requires careful financial planning.
2) Is the market rent of $1,278 (ZORI) above, at, or below the FMR?
Above. If the ZORI were higher than the FMR, it would indicate that market rents exceed the maximum allowable rent for Section 8 tenants, which is not the case here. Landlords seeking to maximize income might find this unattractive for Section 8 properties.
At. If the ZORI equaled the FMR, it would suggest that market conditions align perfectly with Section 8 limits. However, the ZORI of $1,278 is below the FMR of $1690, indicating a favorable environment for Section 8 landlords who can charge closer to the FMR without losing tenants.
Below. Since the ZORI is below the FMR, landlords can expect to charge closer to the FMR of $1690 without significantly deterring potential tenants. This makes the ZIP code attractive for Section 8 investments.
3) Are 40.4% of residents renters and does the 16-day Days on Market (DOM) indicate enough demand?
Yes. With 40.4% of residents being renters and a relatively low DOM of 16 days, there is strong demand for rental properties in this area. This suggests that vacancies will be minimal and the property will likely remain occupied, providing steady income.
No. This answer would apply if the percentage of renters was much lower or the DOM was significantly higher, indicating weak demand. However, given the data, this scenario is unlikely.
It depends. This scenario could apply if the landlord is considering niche markets or specific types of properties that do not align with the general rental trends. However, based on the overall data, the demand appears robust.
In conclusion, based on the provided data, the ZIP code 85023 in Phoenix, AZ, presents a viable opportunity for landlords interested in Section 8 investments. The FMR sufficiently covers debt service, market rents are below the FMR allowing for higher rental income, and demand indicators suggest strong tenant interest.
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.