Location: Madison County, TX | Metro: Leon County, TX
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 | $770 |
| 1 Bedroom | $780 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,410 |
| 4 Bedrooms | $1,560 |
| 5 Bedrooms | $1,810 |
| 6 Bedrooms | $2,027 |
| 7 Bedrooms | $2,189 |
| 8 Bedrooms | $2,298 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,010 | $152,597 | 0.66% | D |
| 3BR | $1,410 | $252,775 | 0.56% | F |
| 4BR | $1,560 | $412,700 | 0.38% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 77864, centered around Madisonville, TX, relies on the discrepancy between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2026, the FMR is set at $970, while the Census ACS indicates that the market rent is $912. This creates a gap of $58, representing approximately a 6.3% difference in favor of the FMR.
The higher FMR compared to the market rent means that landlords can potentially earn more by accepting voucher tenants. When voucher tenants pay the FMR rate, it allows landlords to achieve a higher rental yield than what is currently available in the open market. In Madisonville, TX, where 27.6% of residents are renters, this opportunity becomes particularly significant. The median home value in the area is $239,742, and the median household income is $73,247, indicating a community where affordable housing is a necessity for many.
By participating in the Section 8 program, landlords can capitalize on the government's willingness to cover a portion of the rent that exceeds the market rate. This not only provides a financial advantage but also ensures a stable tenant base, as voucher holders are typically committed to maintaining their housing. However, it's important to note that the higher FMR does not automatically translate into higher profits; landlords must also consider the administrative costs associated with the program and potential maintenance issues.
In conclusion, the $58 gap between the FMR and the market rent in ZIP code 77864 presents an attractive yield play for landlords willing to accept Section 8 vouchers. Given the demographic context of Madisonville, TX, this strategy aligns well with the needs of the local population and can be a profitable approach for property owners looking to maximize their returns while providing necessary housing support.
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.