Location: Houston-The Woodlands-Sugar Land, TX | Metro: Houston-The Woodlands-Sugar Land, TX HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,420 |
| 1 Bedroom | $1,460 |
| 2 Bedrooms | $1,720 |
| 3 Bedrooms | $2,320 |
| 4 Bedrooms | $2,880 |
| 5 Bedrooms | $3,341 |
| 6 Bedrooms | $3,742 |
| 7 Bedrooms | $4,041 |
| 8 Bedrooms | $4,243 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 77362 reveals interesting insights into potential investment opportunities. To start, we annualize the Fair Market Rent (FMR) for a 2-bedroom apartment at $2040 for fiscal year 2024. This figure translates to an annual rental income of $24,480 when applied to a single unit. Given the median home value of $395,240, the implied gross yield for a Section 8 property would be approximately 6.2%. This calculation is derived from dividing the annual rental income by the property's median value.
In contrast, using the market rent figure of $1,732 from the Census ACS, the annual rental income would be $20,784. This results in a gross yield of about 5.3%, calculated similarly by dividing the annual rental income by the median home value. The difference between these two yields highlights the premium that Section 8 can offer over market rents in this area.
The renter density of 9.1% suggests a lower likelihood of finding tenants who are not part of the Section 8 program, making the higher Section 8 yield more appealing. However, the lack of data on days-on-market (DOM) means we cannot assess how quickly properties might be filled or vacated, which could impact cash flow and occupancy rates. Despite this, the higher gross yield from Section 8 indicates a more stable income source, which is particularly beneficial for small-portfolio investors looking for consistent returns.
Landlords should consider the Section 8 yield of 6.2% as a more realistic scenario due to the low renter density. While market rents offer a slightly lower gross yield of 5.3%, the risk of vacancy and the time required to find non-subsidized tenants may outweigh the benefits. Therefore, for ZIP 77362, the Section 8 program presents a solid investment opportunity with a better gross yield compared to market conditions.
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.