Location: Austin-Round Rock-San Marcos, TX | Metro: Austin-Round Rock-San Marcos, TX MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,490 |
| 1 Bedroom | $1,570 |
| 2 Bedrooms | $1,870 |
| 3 Bedrooms | $2,360 |
| 4 Bedrooms | $2,770 |
| 5 Bedrooms | $3,213 |
| 6 Bedrooms | $3,599 |
| 7 Bedrooms | $3,887 |
| 8 Bedrooms | $4,081 |
U.S. Census Bureau data (2024)
To determine if you should buy in ZIP code 78705 (Austin, TX) for Section 8 investments, follow this decision tree:
1) Does FMR ($2230) clear debt service on a $337,153 property?
Yes. The Fair Market Rent (FMR) for ZIP 78705 in fiscal year 2024 is set at $2230. This amount must cover your debt service costs, which include mortgage payments, property taxes, insurance, and maintenance. If these expenses are less than $2230 per month, then FMR clears debt service. For example, if your total monthly debt service is $1800, the answer is yes.
No. If your total monthly debt service exceeds $2230, then FMR does not clear debt service. For instance, if your total monthly debt service is $2400, the answer is no. In this case, investing in ZIP 78705 for Section 8 would not be financially viable.
2) Is market rent ($1,723 ZORI) above, at, or below FMR?
Above. If the market rent is higher than the FMR, meaning it's above $2230, then there's potential for higher returns outside of Section 8. However, you'll need to weigh this against the demand for Section 8 units.
At or Below. If the market rent is at or below the FMR, then renting to Section 8 tenants could be competitive. In ZIP 78705, the Zillow Observed Rent Index (ZORI) stands at $1,723, which is below the FMR. This suggests that Section 8 rents can compete with market rates, making it a viable option.
3) Are 86.9% renters + N/A-day DOM enough demand?
It Depends. With 86.9% of the population being renters, there is significant demand for rental properties. However, the lack of data on days on market (DOM) makes it difficult to assess how quickly properties are rented out. If you find that properties in ZIP 78705 are typically rented within a short period, then the high percentage of renters indicates strong demand. Conversely, if properties take longer to rent, then the high renter percentage might not translate into quick occupancy.
In conclusion, if FMR clears your debt service and the market rent is at or below FMR, then ZIP 78705 is a good area for Section 8 investments. However, the strength of demand will depend on the actual days on market for rental properties, which requires further investigation.
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.