Location: Wharton County, TX | Metro: Houston-The Woodlands-Sugar Land, TX HUD Metro FMR Area
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 | $910 |
| 1 Bedroom | $1,010 |
| 2 Bedrooms | $1,300 |
| 3 Bedrooms | $1,740 |
| 4 Bedrooms | $1,760 |
| 5 Bedrooms | $2,042 |
| 6 Bedrooms | $2,287 |
| 7 Bedrooms | $2,470 |
| 8 Bedrooms | $2,594 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,300 | $167,318 | 0.78% | D |
| 3BR | $1,740 | $281,776 | 0.62% | D |
| 4BR | $1,760 | $401,014 | 0.44% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 77435, East Bernard, TX, reveals some interesting insights. To start, let's consider the Fair Market Rent (FMR) for a two-bedroom unit, which is set at $1070 per month for FY 2024. Annualizing this figure gives us a yearly rental income of $12,840. In contrast, the market rent for a similar unit stands at $1,091 per month, resulting in an annual rental income of $13,092.
With a median home value of $346,585, we can calculate the implied gross yield for both scenarios. For the FMR scenario, the gross yield is approximately 3.71%. This calculation is derived from dividing the annualized FMR ($12,840) by the median home value ($346,585). On the other hand, using the market rent figure, the gross yield increases slightly to 3.78%, calculated by dividing the annualized market rent ($13,092) by the median home value ($346,585).
The difference between these yields is marginal, indicating that the potential returns from renting to Section 8 tenants are very close to those from market-rate tenants. However, the reality of the situation must be considered. The renter density in ZIP 77435 is only 13.8%, suggesting a relatively low demand for rentals overall. Additionally, the lack of data on days on market (DOM) means there is no information about how quickly properties are rented out, which could affect the decision-making process for landlords and small-portfolio investors.
Given the low renter density, it is more realistic to assume that market-rate rents will be harder to achieve consistently. Section 8 rents, while slightly lower, offer a guaranteed source of income through government subsidies. Therefore, the FMR-based gross yield of 3.71% is likely a more reliable estimate for potential returns in this area. Investors should weigh the stability of Section 8 rents against the potential for higher yields from market-rate rentals, considering the local rental market dynamics.
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.