Location: Milam County, TX | Metro: Killeen-Temple, TX HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $890 |
| 1 Bedroom | $900 |
| 2 Bedrooms | $1,110 |
| 3 Bedrooms | $1,540 |
| 4 Bedrooms | $1,870 |
| 5 Bedrooms | $2,169 |
| 6 Bedrooms | $2,429 |
| 7 Bedrooms | $2,623 |
| 8 Bedrooms | $2,754 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 76570 reveals an interesting contrast between federally mandated Fair Market Rent (FMR) and the actual market conditions.
Based on the data provided, the annualized FMR for a two-bedroom property in ZIP 76570 for fiscal year 2024 is $1090 per month. This translates into an annual rental income of $13,080. When this figure is compared to the median home value of $151,039, it implies a gross yield of approximately 8.6%. The calculation is straightforward: $13,080 divided by $151,039 equals 0.0865, or 8.6%.
However, the market rent for a similar two-bedroom property in ZIP 76570, according to Census ACS data, stands at $735 per month. This results in an annual rental income of $8,820. Given the same median home value, this scenario yields a gross rental income of about 5.8%, calculated by dividing $8,820 by $151,039.
The difference between these two gross yields is significant. At 8.6%, the FMR scenario suggests a much higher return on investment compared to the market rent scenario, which offers a 5.8% gross yield. However, the reality of rental dynamics in ZIP 76570 must be considered.
The renter density in ZIP 76570 is 28.0%. This indicates that a substantial portion of the housing stock is owner-occupied, leaving a smaller pool of potential tenants. Additionally, the days-on-market (DOM) data is not available, which could provide insight into how quickly properties are leased. Despite these limitations, the lower market rent scenario appears more realistic due to the alignment with typical rental conditions.
In conclusion, while the Section 8 program guarantees a higher monthly rental rate, the actual market conditions suggest a more modest gross yield. Landlords and small-portfolio investors should carefully consider these factors when evaluating the potential returns of properties in ZIP 76570.
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.