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 | $1,560 |
| 1 Bedroom | $1,680 |
| 2 Bedrooms | $1,950 |
| 3 Bedrooms | $2,570 |
| 4 Bedrooms | $2,850 |
| 5 Bedrooms | $3,306 |
| 6 Bedrooms | $3,703 |
| 7 Bedrooms | $3,999 |
| 8 Bedrooms | $4,199 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,950 | $376,266 | 0.52% | F |
| 3BR | $2,570 | $693,883 | 0.37% | F |
| 4BR | $2,850 | $1,074,436 | 0.27% | F |
| 5BR | $3,306 | $1,571,198 | 0.21% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 85268, Fountain Hills, Arizona, reveals interesting insights into potential investment opportunities. Using the Fair Market Rent (FMR) for a 2-bedroom unit at $2260 annually and the Zillow Observed Rent Index (ZORI) at $2,208 annually, we can calculate the gross yield against the median home value of $675,152.
First, let's annualize the FMR of $2260. This translates to a monthly payment of $188.33. Given the median home value, the implied gross yield for a Section 8 rental property would be approximately 2.79%. The calculation is as follows:
$188.33 * 12 months = $2,260 / $675,152 = 0.00335 or 2.79%
Next, using the ZORI figure of $2,208 annually, the monthly market rent is $184. This yields an implied gross yield of about 2.73%. The calculation is:
$184 * 12 months = $2,208 / $675,152 = 0.00327 or 2.73%
Between these two scenarios, the FMR-based gross yield of 2.79% is slightly higher than the ZORI-based gross yield of 2.73%. However, the reality of the rental market must be considered, particularly with a renter density of 15.6% and a Days on Market (DOM) average of 37 days.
A lower renter density suggests that finding tenants might be more challenging, potentially impacting occupancy rates. Meanwhile, the relatively short DOM of 37 days indicates that properties are rented out quickly once they become available, which could imply strong demand among those who can afford market rents.
Given these factors, the ZORI-based gross yield of 2.73% is more realistic for most investors. While the FMR-based yield is marginally higher, it is important to consider the stability and likelihood of maintaining long-term occupancy at the Section 8 rate. Market conditions suggest that achieving the higher yield might be less certain due to the limited pool of potential tenants eligible for Section 8 housing.
In conclusion, while both figures provide useful benchmarks, the ZORI-based gross yield offers a clearer indication of what investors should expect in terms of returns when considering properties in ZIP 85268 for Section 8 participation.
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.