Location: Montgomery County, KY | Metro: Lexington-Fayette, KY MSA
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 | $820 |
| 1 Bedroom | $1,000 |
| 2 Bedrooms | $1,180 |
| 3 Bedrooms | $1,620 |
| 4 Bedrooms | $1,760 |
| 5 Bedrooms | $2,042 |
| 6 Bedrooms | $2,287 |
| 7 Bedrooms | $2,470 |
| 8 Bedrooms | $2,594 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,180 | $169,018 | 0.7% | D |
| 3BR | $1,620 | $260,716 | 0.62% | D |
| 4BR | $1,760 | $342,713 | 0.51% | F |
| 5BR | $2,042 | $459,810 | 0.44% | F |
U.S. Census Bureau data (2024)
The ZIP code 40391 in Winchester, KY, presents a balanced scenario between yield and stability for real estate investments, particularly for those interested in Section 8 properties. The Fair Market Rent (FMR) for the fiscal year 2024 is set at $1,000, which is significantly lower than the market rent of $1,280. This indicates that there is a potential for higher yields when focusing on FMR-based rentals.
The median home value in ZIP 40391 is $258,082, suggesting a moderate investment cost. With a 29.4% rental rate, the area has a decent base of tenants who prefer renting over owning, which can be advantageous for landlords looking to maintain occupancy. However, the average days on market (DOM) is 40, indicating that properties may take longer to sell if a landlord decides to liquidate their assets. This suggests a level of stability in the rental market but also implies some caution is needed regarding property liquidity.
Average household income in the area is $64,144, which is a key figure for assessing tenant financial stability. Given the lower FMR compared to market rent, the income level supports the idea that there is a reliable tenant pool capable of meeting the FMR requirements, thereby ensuring steady cash flow. However, it's important to note that the income level does not necessarily translate to high market rents, making this area less suitable for high-end luxury rentals.
In conclusion, ZIP 40391 leans towards being a steady-cashflow zone rather than a high-yield/low-stability market. The primary drivers of this classification are the significant difference between FMR and market rent, coupled with a reasonable rental rate percentage and average household income that supports stable tenancy. While yields are attractive due to the lower FMR, the slightly elevated DOM suggests a need for patience in terms of property turnover.
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.