Location: Austin-Round Rock-San Marcos, TX | Metro: Austin-Round Rock-San Marcos, TX MSA
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,330 |
| 1 Bedroom | $1,410 |
| 2 Bedrooms | $1,670 |
| 3 Bedrooms | $2,120 |
| 4 Bedrooms | $2,490 |
| 5 Bedrooms | $2,888 |
| 6 Bedrooms | $3,235 |
| 7 Bedrooms | $3,494 |
| 8 Bedrooms | $3,669 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,670 | $209,615 | 0.8% | D |
| 3BR | $2,120 | $281,700 | 0.75% | D |
| 4BR | $2,490 | $316,228 | 0.79% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 76574 (Taylor, TX) reveals key insights into potential investment returns. The Fair Market Rent (FMR) for a two-bedroom property in fiscal year 2024 is set at $1470 annually. When compared to the median home value of $285,741, this translates to an implied gross yield of approximately 5.15%. This calculation is derived by dividing the annual rental income ($1470) by the median home value ($285,741).
In contrast, the Zillow Observed Rental Index (ZORI) indicates a market rent of $1750 annually for a similar property. Using this figure, the implied gross yield increases to about 6.13%. This higher yield reflects the potential premium that can be achieved through market rents over government-set rates.
To determine which scenario is more realistic, consider the local rental market dynamics. Taylor, TX has a renter density of 23.4%, suggesting a moderate demand for rental properties. However, the lack of data on days on market (DOM) makes it challenging to gauge how quickly properties are rented out and whether they are rented at market rates or below.
Given the median home value and the relatively low renter density, achieving the higher market rent of $1750 annually might be difficult without significant concessions or improvements to the property. The lower implied gross yield of 5.15% based on the FMR seems more plausible under these conditions, as it aligns with the government's assessment of fair rental values.
Investors should also factor in the cost of living adjustments and any changes in the local economy that could affect rental demand. While the higher gross yield of 6.13% is attractive, the 5.15% yield provides a safer, more conservative estimate for long-term investment planning.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.