Section 8 Fair Market Rent (FMR) for ZIP 79608 - 2027

FY 2027 Fair Market Rent Rates

The analysis of the Section 8 cap-rate picture for ZIP code 79608 in Unknown, Texas, is limited by the availability of certain key data points. However, we can still provide some insight based on the information at hand.

The Fair Market Rent (FMR) for a two-bedroom apartment in ZIP 79608 for fiscal year 2024 is set at an annualized rate of $13,560 ($1130 per month). This figure represents the maximum amount that a landlord can charge a tenant who participates in the Section 8 program. Without the exact median home value, it's challenging to calculate the precise cap rate, but we can infer the gross yield.

In the absence of market rent data, let's assume a hypothetical scenario where the market rent for a similar property is higher than the FMR. For instance, if the market rent were $1,500 per month, the annualized market rent would be $18,000. This higher market rent implies a potentially lower gross yield when compared to the FMR-based rental income, assuming the property value remains constant.

The implied gross yield for the Section 8 scenario is calculated by dividing the annualized FMR by the median home value. Since the median home value is not available, we cannot provide a specific percentage. However, the gross yield would be lower than what you might expect from a market-rate rental scenario due to the capped nature of Section 8 rents.

The lack of precise data on renter density and days on market (DOM) further complicates the analysis. However, the general rule of thumb is that areas with higher renter density and shorter DOM tend to favor market-rate rentals over Section 8 units. Given the unknowns here, it's difficult to definitively state which scenario is more realistic.

To conclude, while the exact cap rates cannot be determined without complete data, the gross yield from a Section 8 property in ZIP 79608 would be based on the fixed annualized FMR of $13,560. This yield is likely to be less attractive to investors compared to a property rented at market rates, should the market rates be higher. The decision between Section 8 and market-rate rentals would ultimately depend on the specifics of the local housing market, including vacancy rates, competition, and the overall demand for affordable housing.

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.