Location: Odessa, TX | Metro: Midland, TX HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,360 |
| 1 Bedroom | $1,450 |
| 2 Bedrooms | $1,800 |
| 3 Bedrooms | $2,170 |
| 4 Bedrooms | $2,450 |
| 5 Bedrooms | $2,842 |
| 6 Bedrooms | $3,183 |
| 7 Bedrooms | $3,438 |
| 8 Bedrooms | $3,610 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 79765 provides a detailed look at potential investment returns based on current Fair Market Rent (FMR) and market rent data. For a two-bedroom unit, the annualized FMR for FY 2024 is set at $1890, while the Zillow Observed Rent Index (ZORI) indicates a market rent of $1,852 per month.
To derive the implied gross yield, we first calculate the annual rental income. With an FMR of $1890 per month, the annual rental income would be $22,680. Dividing this by the median home value of $333,444 yields an implied gross yield of approximately 6.8%. On the other hand, using the market rent figure of $1,852 per month, the annual rental income is $22,224, resulting in an implied gross yield of around 6.7%.
The slight difference between the two yields, 6.8% for FMR and 6.7% for market rent, suggests that the actual rental income might align closely with the market conditions. However, considering the renter density of 35.4%, it's important to note that a significant portion of the population in ZIP 79765 prefers homeownership over renting. This implies that while the market rent scenario is slightly less optimistic, it may provide a more realistic projection due to the limited pool of potential renters.
The N/A-day Days on Market (DOM) statistic indicates that there isn't sufficient data to determine how quickly properties are rented out in this area, which could mean either a stable rental market or insufficient data points to draw conclusions. Given the higher homeowner preference, landlords and small-portfolio investors should consider the market rent of $1,852 as a more reliable benchmark for future rental income projections.
In summary, the gross yield derived from the FMR is marginally higher at 6.8%, compared to the market rent yield of 6.7%. While both figures are close, the market rent scenario offers a more grounded perspective, especially when factoring in the local rental market dynamics and renter density.
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.