Location: Tucson, AZ | Metro: Tucson, 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 | $990 |
| 1 Bedroom | $1,100 |
| 2 Bedrooms | $1,420 |
| 3 Bedrooms | $1,970 |
| 4 Bedrooms | $2,230 |
| 5 Bedrooms | $2,587 |
| 6 Bedrooms | $2,897 |
| 7 Bedrooms | $3,129 |
| 8 Bedrooms | $3,285 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,100 | $202,469 | 0.54% | F |
| 2BR | $1,420 | $327,170 | 0.43% | F |
| 3BR | $1,970 | $715,911 | 0.28% | F |
| 4BR | $2,230 | $1,009,162 | 0.22% | F |
| 5BR | $2,587 | $1,359,896 | 0.19% | F |
U.S. Census Bureau data (2024)
A skeptical investor looking into ZIP 85718 in Tucson, AZ might have several concerns regarding the feasibility of investing in properties under the Section 8 program. Let's address these concerns head-on using the available data.
Objection 1: Will the Fair Market Rent (FMR) of $1430 for the zip code in fiscal year 2024 cover the mortgage on a $733,989 home?
The FMR of $1430 is the maximum amount that the Housing Choice Voucher Program will pay for a two-bedroom rental unit in ZIP 85718. To determine if this covers the mortgage on a $733,989 home, we must consider the typical mortgage rates and terms. Assuming a standard 30-year fixed-rate mortgage at an interest rate of 4%, the monthly payment for a $733,989 home would be approximately $3,500. This means that the FMR alone does not cover the mortgage payment. However, it's important to note that landlords can set their own rents, as long as they do not exceed the FMR, and can charge a tenant the difference between the voucher amount and the actual rent. Therefore, while the FMR won't fully cover the mortgage, a landlord can still make a profit by setting a higher rent and having the tenant cover the additional cost.
Objection 2: Is there enough renter demand at 30.9%?
The rental vacancy rate of 30.9% might seem high to some investors, indicating that there could be an oversupply of rental units relative to demand. However, it's crucial to understand that a higher vacancy rate also suggests that there is ample opportunity to attract tenants. In a competitive market, a well-maintained property with reasonable amenities can still find renters willing to sign a lease. The key here is to ensure that the property stands out among others in the area and that the rent is priced competitively. While the data does not provide a detailed breakdown of the tenant pool, it's worth considering that the Housing Choice Voucher Program aims to assist low-income families, and there is likely a steady demand from this segment.
Objection 3: Will vouchers keep pace with $1,521 market rents?
The market rent of $1,521 for a two-bedroom apartment in ZIP 85718 exceeds the FMR of $1430. This gap indicates that vouchers might not cover the entire market rent, potentially leaving landlords with a shortfall. However, the Housing Choice Voucher Program adjusts the FMR annually based on local housing market conditions. If the market rents continue to rise, it's reasonable to expect that the FMR will also increase to reflect these changes. Nonetheless, landlords should prepare for the possibility of receiving less than the full market rent through the voucher program and factor this into their investment strategy. It's also worth noting that the voucher program can provide a stable and reliable source of income, as tenants are typically required to contribute only 30% of their adjusted income toward rent, reducing the risk of non-payment.
In conclusion, while the data presents challenges such as the discrepancy between FMR and market rents, and the relatively high vacancy rate, it also offers insights into how these factors can be managed. Landlords should carefully evaluate their costs and expected returns before deciding to invest in Section 8 properties in ZIP 85718.
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.