Location: Houston-The Woodlands-Sugar Land, 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 | $1,170 |
| 1 Bedroom | $1,200 |
| 2 Bedrooms | $1,420 |
| 3 Bedrooms | $1,910 |
| 4 Bedrooms | $2,370 |
| 5 Bedrooms | $2,749 |
| 6 Bedrooms | $3,079 |
| 7 Bedrooms | $3,325 |
| 8 Bedrooms | $3,491 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,420 | $159,357 | 0.89% | C |
| 3BR | $1,910 | $230,509 | 0.83% | C |
| 4BR | $2,370 | $267,489 | 0.89% | C |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 77518, Bacliff, TX, reveals an interesting scenario when comparing the Federal Market Rent (FMR) to the actual market rent. The annualized FMR for a two-bedroom unit in fiscal year 2024 is $1170, while the market rent, as indicated by ZORI, stands at $1,760.
To derive the gross yield, we first calculate the potential rental income based on these figures. For the FMR scenario, the annual rental income would be $1170 multiplied by 12 months, totaling $14,040. Given the median home value in the area is $218,386, the implied gross yield from FMR is approximately 6.43%. This is calculated by dividing the annual rental income ($14,040) by the median home value ($218,386).
In contrast, using the market rent figure of $1,760 per month, the annual rental income rises to $21,120. The implied gross yield from this market rent is significantly higher at about 9.67%, derived by dividing the annual rental income ($21,120) by the median home value ($218,386).
Given that 38.2% of the population in Bacliff are renters, it's important to consider the demand for rental properties. However, the N/A-day DOM (Days on Market) indicates there might be a lack of recent sales data, which could affect the accuracy of the median home value used in our calculations.
The gross yield comparison clearly shows that relying on the market rent provides a more favorable return on investment compared to the FMR. The 9.67% gross yield from market rent is nearly 50% higher than the 6.43% from FMR. This suggests that landlords and small-portfolio investors should aim to align their rental pricing closer to the market rate to maximize profitability.
While the FMR offers a baseline for government-subsidized housing, the actual market conditions in Bacliff support higher rental rates. Therefore, the $1,760 monthly market rent is more reflective of what landlords can realistically expect, leading to a higher gross yield and potentially better investment outcomes.
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.