Section 8 Fair Market Rent (FMR) for ZIP 75154 - 2027

Investment Score for ZIP 75154

Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)

FY 2027 Fair Market Rent Rates

Unit Size	Monthly FMR
Studio	$1,470
1 Bedroom	$1,510
2 Bedrooms	$1,780
3 Bedrooms	$2,240
4 Bedrooms	$2,850
5 Bedrooms	$3,306
6 Bedrooms	$3,703
7 Bedrooms	$3,999
8 Bedrooms	$4,199

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$1,780	$241,480	0.74%	D
3BR	$2,240	$331,882	0.67%	D
4BR	$2,850	$373,963	0.76%	D
5BR	$3,306	$457,529	0.72%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 75154 (Red Oak, TX) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 75154 is set by HUD for 2026. The FMRs are as follows: - 0BR: $1520 - 1BR: $1590 - 2BR: $1860 (which is 22.2% of the median household income) - 3BR: $2340 - 4BR: $2980 To understand how these FMRs compare to actual rents, we need to consider the price-to-FMR ratio. For a 2BR unit, the Zillow median price is $239,341, which translates to a price-to-FMR ratio of 10.7x. This suggests that the actual rent prices in the area are significantly higher than the FMRs. For voucher holders, this means that the maximum amount they can receive under the Section 8 program is capped at the FMR. In reality, landlords might charge more than the FMR, making it challenging for voucher holders to find affordable housing. Specifically, for a 2BR unit, the FMR is $1860, but the actual rent could be much higher, potentially exceeding the voucher amount. #### Affordability & Renter Profile ZIP code 75154 has a population of 52,516, with 17.8% of the residents being renters. Given the median household income of $100,388, the affordability of rental units is a significant concern. The FMR for a 2BR unit is only 22.2% of the median income, indicating that the majority of residents can afford to pay more than the FMR. However, this also implies that the rental market is relatively tight, with limited options available for those who rely solely on Section 8 vouchers. The occupancy rate of 97.2% further supports the notion that the market is tight. With such high occupancy rates, there is little room for new rentals to enter the market without increasing competition for existing units. This tight market condition makes it difficult for low-income families to secure housing, especially when the actual rent prices are so much higher than the FMR. #### Investor Angle From an investor perspective, the key question is whether properties can generate positive cash flow at the FMR levels. To determine this, we must consider the cost of acquiring and maintaining a property. If we take the Zillow median price of $239,341 for a 2BR unit and assume a typical mortgage rate and terms, the monthly mortgage payment would likely exceed the FMR. For example, if we use a 4.5% interest rate over a 30-year term, the monthly mortgage payment would be approximately $1175. Adding property taxes, insurance, maintenance, and other costs, the total expenses could easily surpass the FMR of $1860. Therefore, relying solely on FMR to cover expenses might not be sufficient, leading to negative cash flow scenarios. Given these dynamics, the investment grade for this ZIP code is moderate. While the demand for rental properties is strong due to the high occupancy rate, the tight market conditions and the disparity between FMR and actual rent prices make it challenging for investors to achieve positive cash flow. #### Specific Actionable Insights 1. **Target Larger Units**: Since the FMR for larger units (3BR and 4BR) is higher, targeting investments in these types of properties could provide better cash flow opportunities. For instance, a 3BR unit with an FMR of $2340 might have a lower price-to-FMR ratio compared to smaller units. 2. **Consider Non-Section 8 Tenants**: Given the high median household income and the fact that only 17.8% of the population are renters, focusing on non-Section 8 tenants could be more profitable. These tenants might be willing to pay above the FMR, thus providing a better return on investment. 3. **Evaluate Property Costs Carefully**: Before investing, carefully evaluate the total cost of ownership, including mortgage payments, property taxes, insurance, and maintenance. Ensure that the FMR can cover these costs and still provide a reasonable profit margin. #### Bottom Line For Section 8-focused investors, the recommendation is to **Skip** this ZIP code. The high price-to-FMR ratio and the tight market conditions make it difficult to achieve positive cash flow. Instead, investors should look for areas where the FMR is closer to the actual rent prices or where the percentage of renters is higher, creating a more favorable environment for Section 8 tenants. However, for investors willing to target a broader range of tenants, including those who can pay above the FMR, ZIP code 75154 could still present opportunities. In such cases, the recommendation would be to **Hold** and carefully select properties that offer a balance between affordability and profitability.

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.