Best Cities for Section 8 Investing in 2026: Top 15 Markets Ranked by Cash Flow

Section 8 investing remains one of the most reliable cash flow strategies in residential real estate. With the Housing Choice Voucher (HCV) program covering roughly 2.3 million households nationwide and federal HAP (Housing Assistance Payment) standards adjusted annually, investors who target the right markets can lock in government-backed rent checks that often exceed local market rents for comparable properties.

But not every metro delivers the same returns. HAP payment standards, local vacancy rates, inspection timelines, and median acquisition costs vary dramatically from city to city. This guide ranks the 15 best markets for Section 8 investing in 2026 using hard data — so you can make allocation decisions with confidence.

How We Ranked These Markets

Every city on this list was scored across five weighted factors:

Factor	Weight	Why It Matters
HAP-to-Price Ratio	30%	Higher HAP relative to purchase price = better cash-on-cash return
Section 8 Vacancy Rate	20%	Low voucher-holder vacancy means faster lease-up
PHA Inspection Pass Rate	15%	Efficient PHAs reduce holding costs between tenants
Median 3BR Acquisition Cost	20%	Lower entry price improves leverage and ROI
Population & Job Growth	15%	Sustained demand for affordable housing

All HAP figures reference FY2026 Fair Market Rents (FMRs) published by HUD. Acquisition costs use Q4 2025 MLS median data for 3-bedroom single-family homes.

The Top 15 Section 8 Markets for 2026

1. Memphis, TN

Memphis consistently tops Section 8 investor lists, and the 2026 numbers confirm why.

FY2026 3BR FMR: $1,290/month
Median 3BR Purchase Price: $115,000
Gross Rent-to-Price Ratio: 1.12%
Section 8 Voucher Utilization: 94%
Estimated Cash-on-Cash Return (25% down): 14.2%

The Memphis Housing Authority (MHA) processes inspections within 15 business days on average. With a metro population of 1.34 million and logistics-driven job growth (FedEx, Amazon distribution), tenant demand remains strong. Property taxes run roughly 1.1% of assessed value — manageable for cash flow investors.

Pro tip: Target zip codes 38109, 38118, and 38116 for the strongest HAP-to-price spreads.

2. Birmingham, AL

Alabama's largest metro offers rock-bottom acquisition costs paired with solid HAP standards.

FY2026 3BR FMR: $1,150/month
Median 3BR Purchase Price: $98,000
Gross Rent-to-Price Ratio: 1.17%
Section 8 Voucher Utilization: 91%
Estimated Cash-on-Cash Return: 15.8%

Birmingham's Housing Authority maintains a waitlist of over 12,000 applicants — meaning tenant placement is nearly instant. The city's medical corridor (UAB Health System) and banking sector provide employment stability. Insurance costs are moderate at $1,200–$1,600/year for a typical 3BR.

3. Indianapolis, IN

Indy combines Midwest affordability with genuine economic diversification.

FY2026 3BR FMR: $1,310/month
Median 3BR Purchase Price: $145,000
Gross Rent-to-Price Ratio: 0.90%
Section 8 Voucher Utilization: 89%
Estimated Cash-on-Cash Return: 11.6%

Indiana's landlord-friendly legal environment (evictions average 3–4 weeks) adds to the appeal. The Indianapolis Housing Agency serves over 10,500 voucher holders, and the metro's 2.1 million population base ensures deep demand. Tech-sector expansion (Salesforce, Infosys) supports long-term rental demand.

4. Cleveland, OH

Cleveland delivers some of the highest gross yields in the country for Section 8 investors.

FY2026 3BR FMR: $1,180/month
Median 3BR Purchase Price: $85,000
Gross Rent-to-Price Ratio: 1.39%
Section 8 Voucher Utilization: 92%
Estimated Cash-on-Cash Return: 17.1%

The Cuyahoga Metropolitan Housing Authority (CMHA) is one of the largest PHAs in Ohio, administering roughly 14,000 vouchers. Beware of higher property taxes (Cuyahoga County effective rate ~2.1%) which eat into net cash flow. Focus on the East Side and inner-ring suburbs for optimal price points.

5. Jackson, MS

Jackson offers the lowest entry point on this list with surprisingly strong HAP standards.

FY2026 3BR FMR: $1,080/month
Median 3BR Purchase Price: $72,000
Gross Rent-to-Price Ratio: 1.50%
Section 8 Voucher Utilization: 96%
Estimated Cash-on-Cash Return: 19.3%

The trade-off: Jackson's population has declined 1.2% annually over the past five years, and [property management](/blog/property-management-complete-guide) can be challenging with limited local PM options. Insurance costs have risen 18% since 2023 due to weather risk. Best for experienced investors who can manage remotely.

6. Columbus, OH

Columbus blends strong fundamentals with a growing population — rare for a high-yield Section 8 market.

FY2026 3BR FMR: $1,340/month
Median 3BR Purchase Price: $165,000
Gross Rent-to-Price Ratio: 0.81%
Section 8 Voucher Utilization: 87%
Estimated Cash-on-Cash Return: 10.2%

Ohio State University and Intel's $20B chip fabrication plant in nearby New Albany are driving population growth of 1.4% annually. The Columbus Metropolitan Housing Authority administers over 13,000 vouchers. Slightly lower gross yields than Cleveland, but appreciation upside is significantly stronger.

7. San Antonio, TX

Texas markets benefit from zero state income tax and landlord-friendly eviction laws (average 21 days).

FY2026 3BR FMR: $1,480/month
Median 3BR Purchase Price: $195,000
Gross Rent-to-Price Ratio: 0.76%
Section 8 Voucher Utilization: 85%
Estimated Cash-on-Cash Return: 9.1%

San Antonio's metro population surpassed 2.6 million in 2025, growing at 1.8% annually. The San Antonio Housing Authority (SAHA) manages approximately 13,500 vouchers. Military installations (Joint Base San Antonio) provide a steady stream of voucher-eligible tenants. Property taxes (~1.8%) are the primary drag on cash flow.

8. Kansas City, MO

KC straddles two states, giving investors flexibility in legal environments and tax structures.

FY2026 3BR FMR: $1,270/month
Median 3BR Purchase Price: $155,000
Gross Rent-to-Price Ratio: 0.82%
Section 8 Voucher Utilization: 88%
Estimated Cash-on-Cash Return: 10.5%

Focus on the Missouri side for lower property taxes (Jackson County effective rate ~1.3% vs. 1.5% in Johnson County, KS). The Housing Authority of Kansas City administers roughly 6,800 vouchers. Tech and logistics growth (Cerner, Amazon) support employment fundamentals.

9. Little Rock, AR

Arkansas offers a landlord-friendly legal framework with no rent control and streamlined evictions.

FY2026 3BR FMR: $1,060/month
Median 3BR Purchase Price: $108,000
Gross Rent-to-Price Ratio: 0.98%
Section 8 Voucher Utilization: 93%
Estimated Cash-on-Cash Return: 12.8%

The Metropolitan Housing Alliance serves the Little Rock metro's affordable housing needs. With a metro population of 748,000 and steady (if modest) job growth of 0.6% annually, Little Rock won't make headlines — but it quietly cash flows. Property taxes average 0.62% of assessed value, among the lowest in the country.

10. Milwaukee, WI

Milwaukee's HAP standards have increased 12% since 2023, outpacing [home price appreciation](/blog/best-cities-for-appreciation-2026) of 8%.

FY2026 3BR FMR: $1,350/month
Median 3BR Purchase Price: $135,000
Gross Rent-to-Price Ratio: 1.00%
Section 8 Voucher Utilization: 90%
Estimated Cash-on-Cash Return: 12.4%

The Housing Authority of the City of Milwaukee (HACM) administers approximately 8,200 vouchers. Wisconsin's [eviction timeline](/blog/how-to-handle-eviction) averages 4–6 weeks — slightly longer than Southern markets but manageable. Target the Northwest Side and West Allis for optimal acquisition pricing.

11. Houston, TX

The nation's fourth-largest metro offers massive scale for portfolio builders.

FY2026 3BR FMR: $1,520/month
Median 3BR Purchase Price: $210,000
Gross Rent-to-Price Ratio: 0.72%
Section 8 Voucher Utilization: 82%
Estimated Cash-on-Cash Return: 8.5%

Houston Housing Authority (HHA) is one of the largest PHAs in the country, serving over 17,000 voucher holders. The energy sector recovery and Texas Medical Center expansion drive employment. Flood zone considerations are critical — always check FEMA maps and factor in [flood insurance](/blog/hurricane-insurance-guide) ($800–$2,400/year) for properties in zones A or AE.

12. St. Louis, MO

St. Louis proper offers aggressive pricing that Missouri-side investors can exploit.

FY2026 3BR FMR: $1,190/month
Median 3BR Purchase Price: $105,000
Gross Rent-to-Price Ratio: 1.13%
Section 8 Voucher Utilization: 91%
Estimated Cash-on-Cash Return: 14.6%

The St. Louis Housing Authority and Housing Authority of St. Louis County together administer over 11,000 vouchers. The city's population decline has slowed to -0.3% annually as downtown revitalization takes hold. North City and North County offer the strongest yields, but due diligence on structural condition is essential.

13. Shreveport, LA

A smaller market that punches above its weight for Section 8 cash flow.

FY2026 3BR FMR: $1,010/month
Median 3BR Purchase Price: $78,000
Gross Rent-to-Price Ratio: 1.29%
Section 8 Voucher Utilization: 95%
Estimated Cash-on-Cash Return: 16.5%

Barksdale Air Force Base provides a stable employment anchor. The Housing Authority of Shreveport administers roughly 4,500 vouchers with a waitlist exceeding 3,000 families. Louisiana's insurance costs (averaging $2,100/year for a 3BR) and higher property taxes in Caddo Parish (1.0%) are the main cost considerations.

14. Dayton, OH

Dayton offers Cleveland-like yields in a smaller, more manageable market.

FY2026 3BR FMR: $1,100/month
Median 3BR Purchase Price: $82,000
Gross Rent-to-Price Ratio: 1.34%
Section 8 Voucher Utilization: 93%
Estimated Cash-on-Cash Return: 17.4%

Wright-Patterson Air Force Base employs over 30,000 people and stabilizes the local economy. The Greater Dayton Premier Management (GDPM) administers housing programs across Montgomery County. Ohio's property taxes remain the primary headwind — Montgomery County's effective rate sits around 1.9%.

15. Columbia, SC

South Carolina's capital combines state-government employment stability with solid Section 8 fundamentals.

FY2026 3BR FMR: $1,250/month
Median 3BR Purchase Price: $162,000
Gross Rent-to-Price Ratio: 0.77%
Section 8 Voucher Utilization: 86%
Estimated Cash-on-Cash Return: 9.4%

Columbia's metro population has grown 1.1% annually, supported by Fort Jackson (the Army's largest basic training installation) and the University of South Carolina. The Columbia Housing Authority administers approximately 3,800 vouchers. South Carolina's property taxes are favorable at ~0.57% effective rate, boosting net cash flow.

Full Comparison Table

Rank	City	3BR FMR	Median Price	Rent/Price	Utilization	Est. CoC Return
1	Memphis, TN	$1,290	$115,000	1.12%	94%	14.2%
2	Birmingham, AL	$1,150	$98,000	1.17%	91%	15.8%
3	Indianapolis, IN	$1,310	$145,000	0.90%	89%	11.6%
4	Cleveland, OH	$1,180	$85,000	1.39%	92%	17.1%
5	Jackson, MS	$1,080	$72,000	1.50%	96%	19.3%
6	Columbus, OH	$1,340	$165,000	0.81%	87%	10.2%
7	San Antonio, TX	$1,480	$195,000	0.76%	85%	9.1%
8	Kansas City, MO	$1,270	$155,000	0.82%	88%	10.5%
9	Little Rock, AR	$1,060	$108,000	0.98%	93%	12.8%
10	Milwaukee, WI	$1,350	$135,000	1.00%	90%	12.4%
11	Houston, TX	$1,520	$210,000	0.72%	82%	8.5%
12	St. Louis, MO	$1,190	$105,000	1.13%	91%	14.6%
13	Shreveport, LA	$1,010	$78,000	1.29%	95%	16.5%
14	Dayton, OH	$1,100	$82,000	1.34%	93%	17.4%
15	Columbia, SC	$1,250	$162,000	0.77%	86%	9.4%

Cash Flow Assumptions

All cash-on-cash return estimates use the following assumptions:

Down payment: 25% (conventional investment loan)
Interest rate: 7.0% (30-year fixed)
Property taxes: Market-specific rates (listed above)
Insurance: Market-specific estimates
Maintenance reserve: 8% of gross rent
Vacancy allowance: 5% (Section 8 tenants average 4.2 years tenure)
Property management: 10% of gross rent
Closing costs: Not included in CoC calculation

Key Strategies for Section 8 Investors in 2026

1. Target Markets Where FMR Exceeds Market Rent

When HUD's Fair Market Rent exceeds what a property would fetch on the open market, you're effectively getting a premium for accepting Section 8 tenants. This is most common in lower-income zip codes within mid-sized metros — exactly where most of these 15 cities cluster.

2. Build PHA Relationships

Each Public Housing Authority operates differently. Some process inspections in 10 days; others take 45. Some allow landlord self-certification for minor repairs; others require re-inspection for every item. Call the PHA before buying in any market and ask about:

Average inspection timeline
Current voucher waitlist size
Payment processing schedule (1st vs. 15th)
Any local landlord incentive programs

3. Budget for HQS Compliance

HUD's Housing Quality Standards (HQS) require properties to meet specific safety and habitability benchmarks. Common fail items include:

Missing GFCI outlets in kitchens and bathrooms
Peeling paint (lead-based paint concern in pre-1978 homes)
Non-functional smoke/CO detectors
HVAC deficiencies
Missing handrails

Budget $2,000–$5,000 for initial HQS compliance on older homes. This is a one-time cost that protects your guaranteed income stream.

4. Understand HAP Contract Terms

The HAP contract is between you and the PHA, not the tenant. Key terms to know:

Contract duration: Typically 1 year, renewable
Rent increase requests: Must be submitted 60 days before anniversary; PHA approval required
Termination: PHA can terminate for HQS violations; you can terminate with proper notice per state law
Portability: Tenants can "port" their voucher to another jurisdiction — meaning they can leave

5. Scale Across Multiple PHAs

Don't concentrate your entire portfolio under one PHA. Federal funding fluctuations, local policy changes, and administrative bottlenecks can all impact a single authority. Diversify across 3–4 PHAs minimum once you exceed 10 units.

The Bottom Line

Section 8 investing in 2026 favors markets with sub-$150,000 median acquisition costs, HAP standards that exceed or match market rents, and landlord-friendly legal environments. The Midwest and South dominate this list for good reason — low entry costs, high gross yields, and favorable landlord-tenant law.

Start with one market. Learn the PHA. Build relationships with inspectors and case workers. Then scale.

The government is paying the rent. Your job is to buy the right property in the right zip code and keep it up to code. Do that, and Section 8 is as close to "passive" as [real estate investing](/blog/brrrr-strategy-guide) gets.

Data sources: HUD FY2026 Fair Market Rents, Zillow Home Value Index (Q4 2025), U.S. Census Bureau population estimates, individual PHA annual reports. Cash flow projections are estimates and actual returns will vary based on property condition, financing terms, and local market conditions.

[[Down Payment Assistance](/blog/down-payment-assistance-programs) Programs in 2026: Complete Guide](/blog/down-payment-assistance-programs)
DSCR Lenders with the Lowest Down Payment Requirements in 2026
[[DSCR Loan Down Payment](/blog/dscr-loan-down-payment-requirements): How Much Do You Really Need?](/blog/dscr-loan-down-payment-requirements)

Best Cities For Section 8 Investing

Key Takeaways