Location: Val Verde County, TX | Metro: Val Verde County, TX
| Unit Size | Monthly FMR |
|---|---|
| Studio | $870 |
| 1 Bedroom | $920 |
| 2 Bedrooms | $1,120 |
| 3 Bedrooms | $1,490 |
| 4 Bedrooms | $1,650 |
| 5 Bedrooms | $1,914 |
| 6 Bedrooms | $2,144 |
| 7 Bedrooms | $2,316 |
| 8 Bedrooms | $2,432 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate for ZIP code 78837 reveals an interesting scenario. The Fair Market Rent (FMR) for a two-bedroom apartment in the metro area for fiscal year 2026 is set at $1,060 per month. This figure annualizes to $12,720 per year. However, the median home value in this ZIP code is not available, which complicates the direct calculation of a cap rate.
To derive the implied gross yield, we must consider the FMR and compare it to the hypothetical market rent. Since the market rent is also not available, we can only provide a theoretical comparison based on the FMR. In a typical scenario where the market rent matches or exceeds the FMR, the gross yield would be directly influenced by the rental income relative to the property's value. For instance, if we assume a conservative estimate for the median home value, say $250,000, the gross yield using the FMR would be approximately 5.09%. This is calculated by taking the annualized FMR ($12,720) and dividing it by the assumed median home value ($250,000).
The actual market rent being unavailable means that the true gross yield could be higher if market rents surpass the FMR. However, without specific market rent data, we cannot provide a precise comparison. Given the 12.9% renter density in ZIP 78837, it is important to note that while there is a notable percentage of renters, it is still relatively low compared to urban areas with higher renter densities. This suggests that demand for rental properties, particularly those participating in the Section 8 program, might be lower, impacting potential occupancy rates and thus the effective gross yield.
The Days on Market (DOM) data is also not available, which would normally help us understand how quickly properties are leased. Without this information, it is challenging to assess the speed at which rental income can be realized. However, the 12.9% renter density implies that landlords should be prepared for potentially longer leasing periods and possibly lower occupancy rates, especially if competing against non-subsidized housing options.
In conclusion, the implied gross yield based on the FMR and an assumed median home value of $250,000 is around 5.09%. While this provides a baseline, the lack of market rent and DOM data means that the actual performance could vary. Landlords and small-portfolio investors should focus on securing properties with competitive advantages, such as location and amenities, to maximize their chances of achieving higher occupancy rates and gross yields. The FMR scenario is more concrete due to the availability of the data, making it a reliable starting point for investment decisions in ZIP 78837.
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.