Location: Fayette County, TX | Metro: Austin County, TX HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $850 |
| 1 Bedroom | $940 |
| 2 Bedrooms | $1,110 |
| 3 Bedrooms | $1,490 |
| 4 Bedrooms | $1,660 |
| 5 Bedrooms | $1,926 |
| 6 Bedrooms | $2,157 |
| 7 Bedrooms | $2,330 |
| 8 Bedrooms | $2,447 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 78940 reveals some interesting dynamics between the Federal Market Rent (FMR) and the actual market rent. The annualized FMR for a two-bedroom apartment in ZIP 78940 for fiscal year 2024 is set at $920. Meanwhile, the Census ACS indicates the market rent for a similar unit is $919.
To derive the gross yield, we first calculate the annual rental income for both scenarios. For the FMR scenario, the annual rental income would be $920 multiplied by 12, resulting in $11,040. For the market rent scenario, the annual rental income would be $919 multiplied by 12, equating to $11,028.
The median home value in ZIP 78940 is $598,367. Using this figure, the implied gross yield for the FMR scenario is approximately 1.85%. This is calculated by dividing the annual rental income ($11,040) by the median home value ($598,367). For the market rent scenario, the implied gross yield is slightly lower at 1.84%, derived by dividing $11,028 by $598,367.
The 5.4% renter density suggests that there is a relatively low demand for rental properties in this area compared to owner-occupied homes. However, the gross yields calculated above are based on the assumption that the property is fully occupied and rented at either the FMR or market rate throughout the year. In reality, vacancy rates and other factors could impact these figures.
The N/A-day Days on Market (DOM) implies that there might not be enough recent sales data to accurately determine how long properties typically stay on the market before being sold. This lack of information can affect the reliability of the median home value used in our calculations.
Given the slight difference between the FMR and market rent, the gross yields are nearly identical. However, the FMR scenario is more likely to be accurate for Section 8 investors because it directly reflects the government-set payment standard. For small-portfolio investors, understanding these yields is crucial, as they provide a baseline for expected returns. While the yields are modest, they must be considered alongside the stability and predictability of Section 8 payments.
In conclusion, investors should focus on the FMR scenario when evaluating potential returns in ZIP 78940, given the specific nature of Section 8 housing. The gross yield of 1.85% provides a clear benchmark, though individual circumstances such as property management costs and local market conditions will influence final net operating income (NOI).
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.