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 | $1,860 |
| 1 Bedroom | $2,000 |
| 2 Bedrooms | $2,320 |
| 3 Bedrooms | $3,060 |
| 4 Bedrooms | $3,400 |
| 5 Bedrooms | $3,944 |
| 6 Bedrooms | $4,417 |
| 7 Bedrooms | $4,770 |
| 8 Bedrooms | $5,009 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,320 | $401,770 | 0.58% | F |
| 3BR | $3,060 | $551,388 | 0.55% | F |
| 4BR | $3,400 | $759,900 | 0.45% | F |
| 5BR | $3,944 | $1,074,765 | 0.37% | F |
U.S. Census Bureau data (2024)
In analyzing the real estate investment potential of ZIP 85284, located in Tempe, AZ, several key concerns arise that need to be addressed with data.
Objection 1: Will Fair Market Rent (FMR) of $2,790 for ZIP 85284 in fiscal year 2024 cover the mortgage on a home valued at $715,696?
The FMR of $2,790 is a critical benchmark for rental income in the area. However, it does not directly translate into mortgage coverage without considering the interest rate and loan terms. Assuming a typical 30-year fixed-rate mortgage at an average rate of around 5%, the monthly mortgage payment for a home priced at $715,696 would be approximately $3,750. This means that relying solely on FMR would not be sufficient to cover the mortgage payment. Investors must consider additional sources of income or lower their purchase price expectations to align with the rental income potential.
Objection 2: Is there enough renter demand at 18.2%?
The percentage of renter-occupied housing units at 18.2% suggests a relatively low demand for rentals compared to owner-occupied units. This can be concerning for landlords and small-portfolio investors looking to maximize occupancy rates. However, it's important to note that ZIP 85284 includes a significant portion of owner-occupied homes, which might indicate a preference for homeownership in the area. To mitigate this risk, investors should focus on properties that cater to the specific needs of renters, such as proximity to universities, employment centers, or amenities that attract a steady flow of tenants.
Objection 3: Will Housing Choice Vouchers keep pace with market rents of $2,640?
The Housing Choice Voucher program aims to provide affordable housing assistance to eligible families. However, the voucher amount may not always match the market rents. In ZIP 85284, with market rents averaging $2,640, landlords should be cautious about relying solely on voucher recipients to fill their units. The voucher amount typically covers only a portion of the total rent, requiring tenants to pay the remainder. If the voucher amount lags behind the market rents, it could lead to financial strain on tenants or reduced willingness to accept voucher holders. Landlords must balance their rent pricing to accommodate both voucher and non-voucher tenants while ensuring profitability.
The data provides insights into the rental market dynamics but does not offer a complete picture of how these factors will evolve over time. For instance, changes in local economic conditions, housing policies, or shifts in population demographics could alter the landscape. Investors should stay informed about these trends to make well-informed decisions.
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.