Location: Amarillo, TX | Metro: Amarillo, TX HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $860 |
| 1 Bedroom | $970 |
| 2 Bedrooms | $1,190 |
| 3 Bedrooms | $1,630 |
| 4 Bedrooms | $1,800 |
| 5 Bedrooms | $2,088 |
| 6 Bedrooms | $2,339 |
| 7 Bedrooms | $2,526 |
| 8 Bedrooms | $2,652 |
The analysis of the Section 8 cap-rate scenario for ZIP code 79012 reveals some interesting insights, though it is limited by the availability of certain key metrics such as the median home value and market rent. However, we can still derive a rough picture using the available Fair Market Rent (FMR) data.
The annualized 2-bedroom FMR for ZIP 79012 in fiscal year 2024 is set at $1030 per month. This figure represents the maximum rental amount that a Section 8 tenant would be eligible to pay under the program. To calculate the implied gross yield, we need to compare this FMR against the median home value. Unfortunately, the median home value for ZIP 79012 is not available, making a direct calculation impossible. However, we can infer the potential gross yield by considering typical ratios between home values and rental incomes in similar markets.
In a scenario where the median home value is known, the gross yield would be calculated by dividing the annual rental income by the median home value. For instance, if the median home value were hypothetically $206,000 (which is twice the annual FMR), the gross yield would be approximately 6%. This calculation assumes a steady stream of rental income and no other costs, providing a baseline for comparison.
Given the lack of market rent data, we cannot provide an exact comparison with non-Section 8 rental yields. However, the absence of this data suggests that the local rental market might be less active or reliable for accurate pricing. This could imply that the Section 8 rental rate of $1030 per month is closer to the actual market rate than in areas where market rents are significantly higher.
The renter density in ZIP 79012 is listed as N/A, which means we do not have a precise percentage to work with. Typically, higher renter density indicates a stronger demand for rentals, potentially leading to higher market rents. The days on market (DOM) is also listed as N/A, which would normally give us insight into how quickly properties are rented out. Without these figures, it's challenging to gauge the overall health and activity level of the rental market in this area.
Based on the available data, the implied gross yield from the Section 8 program is likely to be lower than what might be achievable in a robust market rent environment. However, the stability and guaranteed nature of Section 8 tenants can offer a reliable source of income, especially in areas where market rents are volatile or uncertain. Landlords and small-portfolio investors should consider these factors when deciding whether to participate in the Section 8 program.
Data Sources: FMR data from HUD (2027).
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.