Location: Bailey County, TX | Metro: Cochran County, TX HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $750 |
| 1 Bedroom | $870 |
| 2 Bedrooms | $1,030 |
| 3 Bedrooms | $1,250 |
| 4 Bedrooms | $1,700 |
| 5 Bedrooms | $1,972 |
| 6 Bedrooms | $2,209 |
| 7 Bedrooms | $2,386 |
| 8 Bedrooms | $2,505 |
U.S. Census Bureau data (2024)
The analysis of Section 8 cap-rates for ZIP code 79346 reveals a significant discrepancy between the federally determined Fair Market Rent (FMR) and the actual market rents. The annualized FMR for a 2-bedroom unit is set at $1,000, while the Census ACS indicates a market rent of $691 per month.
To calculate the gross yield for a property valued at $49,521, we first need to determine the annual rental income under both scenarios. For the FMR scenario, the annual rental income would be $12,000 ($1,000 x 12 months), resulting in a gross yield of approximately 24.2% ($12,000 / $49,521).
In contrast, using the market rent figure of $691 per month, the annual rental income would be $8,292 ($691 x 12 months), leading to a gross yield of about 16.7% ($8,292 / $49,521).
The disparity between these two yields highlights the potential benefits of participating in the Section 8 program versus relying solely on market rents. However, the reality of the situation must also take into account the local rental market dynamics. With a renter density of 37.7%, it's clear that there is a substantial demand for rental properties, but the N/A-day DOM (Days On Market) suggests that data regarding how quickly units are rented might be incomplete or unavailable, making it difficult to predict vacancy rates accurately.
Given the higher gross yield associated with the FMR, it appears more favorable for landlords and small-portfolio investors. This scenario assumes a steady stream of income guaranteed by the federal government, which can be particularly attractive in areas where market rents are lower and vacancy rates could potentially be higher. However, the decision should also consider the administrative requirements and potential limitations of the Section 8 program.
The market rent scenario provides a baseline for understanding the typical rental income in ZIP 79346, but the gross yield is significantly lower compared to the FMR scenario. Investors should weigh the certainty of the higher yield against the possible drawbacks of the Section 8 program when making investment decisions.
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.