Location: Shelby County, KY | Metro: Louisville, KY-IN 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 | $1,390 |
| 1 Bedroom | $1,520 |
| 2 Bedrooms | $1,820 |
| 3 Bedrooms | $2,320 |
| 4 Bedrooms | $2,680 |
| 5 Bedrooms | $3,109 |
| 6 Bedrooms | $3,482 |
| 7 Bedrooms | $3,761 |
| 8 Bedrooms | $3,949 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,820 | $420,588 | 0.43% | F |
| 3BR | $2,320 | $435,178 | 0.53% | F |
| 4BR | $2,680 | $528,491 | 0.51% | F |
| 5BR | $3,109 | $705,501 | 0.44% | F |
U.S. Census Bureau data (2024)
The classification of ZIP 40245 in Louisville, KY, hinges on its financial metrics related to rental yields and market stability. The Fair Market Rent (FMR) for the area in fiscal year 2024 is set at $1780. This figure represents the maximum amount a tenant receiving Section 8 assistance can pay towards rent. In comparison, the average market rent stands at $1,589. The disparity between these two figures suggests a potential opportunity for higher yields if landlords can secure tenants with Section 8 vouchers.
However, the stability of the market is another critical factor. With only 23.0% of residents being renters, the pool of potential tenants is relatively small. Additionally, the days on market (DOM) for rental properties is 25 days, indicating that it takes a moderate amount of time to find a new tenant, which could lead to periods of vacancy and lost income. The median household income in the area is $122,948, which is above the national average, suggesting a financially stable population but also potentially higher competition for tenants who might prefer owner-occupied homes.
The median home value in ZIP 40245 is $480,812, which is quite high for a rental market. This high home value might indicate that the area is desirable, but it also implies that there is a significant difference between what homeowners might be willing to pay in mortgage costs versus what renters are paying. Given these factors, ZIP 40245 leans more toward a steady-cashflow zone rather than a high-yield/low-stability flip-style market. The slightly higher FMR compared to market rent offers a modest yield advantage, but the relatively low percentage of renters and moderate DOM suggest a need for careful tenant selection to maintain consistent occupancy and cash flow.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.