Glossary
FMR (fair market rent)
FMR (fair market rent) is HUD's yearly estimate of rent for an area by bedroom count. Investors use it as a free check on their rent estimate.
HUD publishes FMRs every year for metro areas and counties. Local housing authorities use them to set payment standards for the Housing Choice Voucher program, often called Section 8.
FMRs are set by bedroom count, from studios up. Look up the figure for your county or metro area and the right bedroom count on HUD's website.
How investors use it
- A sanity check. If your rent estimate is far above FMR, find out why before you trust it.
- Voucher rentals. FMR helps you see roughly what a voucher tenant's rent might look like. The actual payment standard comes from the local housing authority.
- A floor or ceiling. FMR is an area estimate. It does not know your house's condition, finishes or exact location.
Run The Deal uses FMR as a free rent check next to your own estimate.
- FMR for a 3-bedroom in the area (hypothetical)
- $1,700
- Your rent estimate
- $2,100
- Difference
- $400
A gap this size is a reason to check rent comps, not proof the estimate is wrong.
What to watch
- FMR covers a whole area. A renovated house in a strong neighborhood can rent above it.
- FMR includes an allowance for utilities in many cases. Compare like with like.
- Market rents can move faster than the yearly update.
Rent drives your DSCR and cash flow. Test a range of rents in the rental property calculator.
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