Location: Lexington-Fayette, KY | Metro: Lexington-Fayette, KY MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $950 |
| 1 Bedroom | $1,160 |
| 2 Bedrooms | $1,360 |
| 3 Bedrooms | $1,870 |
| 4 Bedrooms | $2,020 |
| 5 Bedrooms | $2,343 |
| 6 Bedrooms | $2,624 |
| 7 Bedrooms | $2,834 |
| 8 Bedrooms | $2,976 |
U.S. Census Bureau data (2024)
The analysis for ZIP 40339 in Versailles, KY, centers on the disparity between the Fair Market Rent (FMR) set by HUD and the actual market rents. For fiscal year 2024, the FMR for a two-bedroom unit is $1,030. However, based on recent rental listings in the surrounding areas, the market rents for similar units range from approximately $920 to $1,847 per month.
To clarify the gap, let's consider a two-bedroom unit renting for $1,450 per month as an example. This represents a $420 difference from the FMR, or about 41% above the FMR. The FMR being significantly lower than the market rent means that landlords who accept Section 8 vouchers are effectively subsidizing the rental market. They receive payments below the market rate, which can lead to reduced yields compared to open-market rentals.
In ZIP 40339, only 10.5% of residents are renters, indicating a primarily owner-occupied area. With a median household income of $130,625, landlords should consider the potential impact of accepting Section 8 tenants. While it can provide a steady stream of rental income, the overall yield might be lower due to the subsidy nature of the program.
Landlords must weigh the benefits of guaranteed rent against the administrative burden and the possibility of lower returns. Given the high median income and low percentage of renters, the decision to participate in the Section 8 program should be carefully considered to ensure it aligns with investment goals and financial expectations.
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.