Location: El Paso, TX | Metro: El Paso, TX HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $740 |
| 1 Bedroom | $920 |
| 2 Bedrooms | $1,080 |
| 3 Bedrooms | $1,470 |
| 4 Bedrooms | $1,800 |
| 5 Bedrooms | $2,088 |
| 6 Bedrooms | $2,339 |
| 7 Bedrooms | $2,526 |
| 8 Bedrooms | $2,652 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 79901 provides a clear picture of potential rental income versus market conditions. Based on the Fair Market Rent (FMR) for a 2-bedroom apartment set at $910 per month for fiscal year 2024, the annualized rent would be $10,920. In contrast, the market rent for a similar unit is reported at $555 per month according to the Census ACS, which annualizes to $6,660.
To calculate the gross yield, we use the median home value of $137,644. For the Section 8 scenario, the gross yield is approximately 7.94%, calculated as follows: ($10,920 / $137,644) * 100. This indicates that an investor could expect to earn roughly 7.94% of the property's value annually in rental income if they participate in the Section 8 program.
For the market rent scenario, the gross yield drops significantly to about 4.84%. The calculation here is: ($6,660 / $137,644) * 100. This means that an investor would earn only 4.84% of the property's value annually in rental income if they rely solely on market rates without the Section 8 subsidy.
The stark difference between these two gross yields underscores the financial advantage of participating in the Section 8 program. Given that 91.9% of the residents in ZIP 79901 are renters, there is a strong demand for affordable housing, making the Section 8 scenario more realistic. The high renter density suggests a stable tenant pool, reducing the risk of vacancy. Additionally, the N/A-day DOM (days on market) implies that properties in this area are rented quickly once listed, further supporting the reliability of the Section 8 program for steady income.
In summary, while the market rent scenario offers a lower gross yield, the Section 8 program provides a higher and more consistent gross yield of 7.94% compared to the 4.84% from market rents. Landlords and small-portfolio investors should consider the benefits of the Section 8 program, especially in light of the strong rental market dynamics in ZIP 79901.
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.