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 | $1,080 |
| 1 Bedroom | $1,170 |
| 2 Bedrooms | $1,380 |
| 3 Bedrooms | $1,870 |
| 4 Bedrooms | $2,120 |
| 5 Bedrooms | $2,459 |
| 6 Bedrooms | $2,754 |
| 7 Bedrooms | $2,974 |
| 8 Bedrooms | $3,123 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,380 | $257,401 | 0.54% | F |
| 3BR | $1,870 | $334,421 | 0.56% | F |
| 4BR | $2,120 | $373,135 | 0.57% | F |
| 5BR | $2,459 | $431,413 | 0.57% | F |
U.S. Census Bureau data (2024)
The analysis of ZIP 85040 in Phoenix, AZ, reveals several key points for landlords and small-portfolio investors. The Federal Market Rent (FMR) for the zip code in fiscal year 2024 is set at $1570, which is significantly lower than the market rent of $1,924 as indicated by the Zillow Observed Rent Index (ZORI). This means that the rent math does indeed work, allowing landlords to potentially receive a higher rent than the FMR.
Regarding property acquisition, the median home value stands at $322,739. While the average number of days on market (DOM) is not available, the low 0.3% price-cut share suggests that homes are generally selling close to their asking prices. This indicates that acquiring properties in this area could be relatively straightforward and affordable, especially when considering the potential rental income.
Tenant demand is strong in ZIP 85040, with a total population of 34,117 and 52.1% of residents being renters. This high percentage of renters provides a robust pool of potential tenants, ensuring steady demand for rental properties.
Verdict: ZIP 85040 presents a favorable investment scenario for landlords and small-portfolio investors. The disparity between the FMR and market rent allows for profitable leasing opportunities. Property acquisition is feasible with a median home value of $322,739, and the low price-cut share indicates a stable real estate market. Strong tenant demand, driven by a significant renter population, ensures a reliable stream of potential occupants. These factors collectively make ZIP 85040 an attractive location for real estate investments focused on rental income.
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.