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 | $1,230 |
| 1 Bedroom | $1,380 |
| 2 Bedrooms | $1,770 |
| 3 Bedrooms | $2,450 |
| 4 Bedrooms | $2,790 |
| 5 Bedrooms | $3,236 |
| 6 Bedrooms | $3,624 |
| 7 Bedrooms | $3,914 |
| 8 Bedrooms | $4,110 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,770 | $264,748 | 0.67% | D |
| 3BR | $2,450 | $326,931 | 0.75% | D |
| 4BR | $2,790 | $367,769 | 0.76% | D |
| 5BR | $3,236 | $445,967 | 0.73% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 85741 in Tucson, AZ, reveals some interesting insights into potential investment returns. The Fair Market Rent (FMR) for a 2-bedroom unit in fiscal year 2024 is set at $1610 per month, while the Zillow Observed Rent Index (ZORI) for the same type of unit stands at $1580 monthly. Using these figures, we can calculate the implied gross yields for both scenarios.
First, let's consider the FMR scenario. With an annualized rent of $19,320 ($1610 x 12), the implied gross yield would be approximately 5.94%. This calculation is derived by dividing the annual rent by the median home value of $325,355. For the ZORI scenario, the annualized rent comes to $18,960 ($1580 x 12), resulting in an implied gross yield of 5.83% when divided by the median home value.
The difference between these two gross yields is minimal, indicating that the market rent closely aligns with the government-set fair market rent. However, considering the local rental market conditions, the ZORI figure is more reflective of what landlords might actually receive from tenants. In ZIP 85741, the renter density is 36.5%, suggesting a moderate demand for rental properties. Additionally, the Days on Market (DOM) average of 21 days indicates a relatively quick turnover rate for rental listings, which supports the use of market rent as a more accurate basis for calculating the gross yield.
Given these factors, the ZORI-based gross yield of 5.83% is likely the more realistic figure for potential investors. While the FMR provides a useful benchmark, it is the actual market conditions that determine the true rental income a property can generate. Therefore, for a 2-bedroom property in ZIP 85741, investors should expect a gross yield closer to 5.83% rather than the slightly higher 5.94% based on FMR.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.