Location: McAllen-Edinburg-Mission, TX | Metro: McAllen-Edinburg-Mission, TX MSA
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 | $800 |
| 1 Bedroom | $800 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,310 |
| 4 Bedrooms | $1,440 |
| 5 Bedrooms | $1,670 |
| 6 Bedrooms | $1,870 |
| 7 Bedrooms | $2,020 |
| 8 Bedrooms | $2,121 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,010 | $89,193 | 1.13% | B |
| 3BR | $1,310 | $134,542 | 0.97% | C |
| 4BR | $1,440 | $205,350 | 0.7% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 78543 (Elsa, TX) reveals a detailed picture of potential investment returns based on Fair Market Rent (FMR) and market rent figures. The annualized Fair Market Rent for a 2-bedroom apartment in FY 2024 is set at $910 per month, equating to an annual rent of $10,920. Using the median home value of $126,340, the implied gross yield for the FMR scenario can be calculated. This results in a gross yield of approximately 8.65%.
In contrast, the market rent for a 2-bedroom apartment is reported at $844 per month according to the Census ACS data. When annualized, this translates to an annual rent of $10,128. Applying the same median home value of $126,340, the gross yield under the market rent scenario is approximately 7.97%. This lower figure reflects the actual rental rates in the area rather than the government-set FMRs.
The gross yield comparison clearly shows that the FMR scenario provides a higher return on investment at 8.65%, compared to the market rent scenario's 7.97%. However, the realism of these figures must be considered in light of Elsa, TX's 25.5% renter density. Given this relatively low percentage of renters, it is important to note that a significant portion of the housing stock may be owner-occupied, potentially limiting the pool of tenants available for Section 8 properties.
The N/A-day Days on Market (DOM) suggests that there is insufficient data to determine how quickly rental properties turn over in this area. This lack of turnover data can impact the reliability of the gross yield calculations, as it does not account for potential vacancy periods. Therefore, while the FMR scenario offers a more attractive gross yield, investors should consider the market realities, including the limited rental demand indicated by the renter density, before making any investment decisions.
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.