Location: Tyler, TX | Metro: Tyler, TX MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $990 |
| 1 Bedroom | $1,090 |
| 2 Bedrooms | $1,340 |
| 3 Bedrooms | $1,800 |
| 4 Bedrooms | $1,950 |
| 5 Bedrooms | $2,262 |
| 6 Bedrooms | $2,533 |
| 7 Bedrooms | $2,736 |
| 8 Bedrooms | $2,873 |
U.S. Census Bureau data (2024)
To decide whether to invest in ZIP 75701 (Tyler, TX) for Section 8 properties, follow these steps:
Step 1: Does the Fair Market Rent (FMR) of $1230 cover the debt service on a property valued at $225,538?
Yes: The FMR of $1230 is sufficient if the monthly debt service is less than this amount. Debt service includes mortgage payments, property taxes, insurance, and maintenance costs.
No: If the monthly debt service exceeds $1230, then relying solely on Section 8 tenants will not be financially viable. For instance, if the debt service is $1300, the shortfall would be $70 per month.
It Depends: If the debt service is close to $1230, consider additional sources of income such as utility reimbursements or other subsidies. If the debt service is $1200, the FMR comfortably covers it, leaving a small buffer.
Step 2: How does the Zillow Rent Index (ZORI) of $1461 compare to the FMR?
Above FMR: The ZORI being $1461 is above the FMR of $1230, indicating that the market rent is higher than what Section 8 pays. This suggests potential opportunities to diversify tenant mix or increase profitability through non-Section 8 rentals.
At FMR: If the ZORI were exactly $1230, it would mean the market rent aligns with the FMR, making Section 8 rentals competitive but not necessarily more profitable than market-rate rentals.
Below FMR: Since the ZORI is above the FMR, this scenario does not apply. However, if it were below, it would indicate that Section 8 rents are higher than market rates, which could make the area attractive for Section 8-only investments.
Step 3: Is there sufficient demand with 40.0% of residents being renters and an average days on market (DOM) of 29 days?
Yes: With 40.0% of residents renting and an average DOM of 29 days, the demand appears strong. This means that properties are likely to be occupied quickly, reducing vacancy rates and increasing cash flow stability.
No: If the percentage of renters was lower or the DOM significantly higher, it would indicate weaker demand. In ZIP 75701, neither of these conditions hold true, so this branch does not apply.
It Depends: If the percentage of renters was around 40.0%, but the DOM was closer to 60 days, it might suggest slower turnover and thus less immediate demand. However, with a DOM of only 29 days, the demand is robust.
In conclusion, ZIP 75701 presents a favorable environment for Section 8 investments given the alignment between FMR and debt service, the premium market rent, and strong rental demand. Landlords can expect to find a balance between financial viability and occupancy rates.
Data Sources: FMR data from HUD (2027). 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.