Location: Corpus Christi, TX | Metro: Corpus Christi, TX HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $930 |
| 1 Bedroom | $1,010 |
| 2 Bedrooms | $1,230 |
| 3 Bedrooms | $1,620 |
| 4 Bedrooms | $1,850 |
| 5 Bedrooms | $2,146 |
| 6 Bedrooms | $2,404 |
| 7 Bedrooms | $2,596 |
| 8 Bedrooms | $2,726 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 78407 reveals some interesting insights into potential investment opportunities. For the purposes of this analysis, we will focus on the financial metrics related to two-bedroom units.
The Fair Market Rent (FMR) for a two-bedroom unit in ZIP 78407 for FY 2024 is set at $1270 per month. This translates to an annual rental income of $15,240. Given the median home value of $98,443, the implied gross yield for a property rented under the Section 8 program would be approximately 15.5%. The calculation is straightforward: divide the annual rental income by the median home value ($15,240 / $98,443 = 15.5%).
In contrast, the market rent for a similar two-bedroom unit, according to Census ACS data, stands at $1,037 per month. This amounts to an annual rental income of $12,444. Using the same median home value, the implied gross yield for a market-rented property would be around 12.6% ($12,444 / $98,443 = 12.6%).
The difference in gross yields between the Section 8 scenario and the market scenario highlights the financial trade-offs involved. Section 8 properties offer a higher gross yield, reflecting the guaranteed income stream and lower vacancy risk associated with government-subsidized housing. However, the market rent scenario provides a more realistic outlook considering that only 37.0% of residents in ZIP 78407 are renters. This suggests a significant portion of the population might prefer homeownership over renting, potentially impacting the demand for rental properties.
The lack of data on days on market (DOM) makes it difficult to predict how quickly a property might be leased. Nevertheless, the higher gross yield from Section 8 properties, despite the lower renter density, could still be attractive to investors seeking stable, long-term income. Conversely, the market rent scenario, while offering a slightly lower gross yield, may appeal to those who wish to avoid the administrative complexities often associated with Section 8 tenancy.
To conclude, the gross yield comparison clearly favors Section 8 properties at 15.5%, compared to the market rent scenario at 12.6%. Investors should weigh these figures against other factors such as the administrative overhead and tenant mix preferences when making their investment decisions.
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.