Location: El Paso, TX | Metro: El Paso, TX HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| 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 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,080 | $164,113 | 0.66% | D |
| 3BR | $1,470 | $194,346 | 0.76% | D |
| 4BR | $1,800 | $237,918 | 0.76% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 79903 in El Paso, TX, reveals key insights into the potential returns for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a two-bedroom apartment in fiscal year 2024 is set at $1,000 per month, while the Zillow Observed Rent Index (ZORI) indicates a market rent of $1,067 per month. Given a median home value of $178,603, we can calculate the implied gross yield for both scenarios.
First, let's consider the Section 8 scenario. With an annualized rental income of $12,000 ($1,000 x 12 months), the gross yield is calculated by dividing the annual rental income by the property value. This yields an implied gross yield of approximately 6.72%. The formula used here is: Gross Yield = Annual Rental Income / Property Value. Therefore, 12,000 / 178,603 = 0.0672 or 6.72%.
Next, we look at the market rent scenario. With an annualized rental income of $12,804 ($1,067 x 12 months), the gross yield increases to about 7.18%. Using the same formula, Gross Yield = Annual Rental Income / Property Value, we get 12,804 / 178,603 = 0.0718 or 7.18%.
Given that 42.8% of residents in ZIP 79903 are renters, it is important to consider the demand for rental properties, including those under Section 8. The N/A-day Days on Market (DOM) suggests that there is a high demand for rentals, which could indicate that properties are occupied quickly once listed. However, the DOM figure being N/A also implies that there might be limited data available, possibly due to rapid turnover rates or other factors affecting data collection.
In terms of realism, the market rent scenario appears more favorable. It provides a higher gross yield, indicating a better return on investment. However, the Section 8 scenario offers a more stable and predictable cash flow, which is attractive to some investors who prioritize security over the slightly higher returns offered by market rents. The choice between these two scenarios depends on the investor's risk tolerance and financial goals.
To summarize, the gross yield for a two-bedroom property in ZIP 79903 under Section 8 is 6.72%, while the market rent scenario yields 7.18%. Given the high renter density and the likely quick occupancy rates, the market rent scenario presents a more lucrative opportunity, though the stability offered by Section 8 should not be overlooked.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.