Location: Madison County, KY | Metro: Madison County, KY
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 | $720 |
| 1 Bedroom | $890 |
| 2 Bedrooms | $1,030 |
| 3 Bedrooms | $1,430 |
| 4 Bedrooms | $1,660 |
| 5 Bedrooms | $1,926 |
| 6 Bedrooms | $2,157 |
| 7 Bedrooms | $2,330 |
| 8 Bedrooms | $2,447 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,030 | $209,431 | 0.49% | F |
| 3BR | $1,430 | $298,411 | 0.48% | F |
| 4BR | $1,660 | $402,688 | 0.41% | F |
| 5BR | $1,926 | $535,476 | 0.36% | F |
U.S. Census Bureau data (2024)
Richmond, Kentucky (ZIP 40475) serves as an economic and educational hub for Madison County, defined largely by the presence of Eastern Kentucky University. This institution anchors the local economy, providing a steady stream of faculty, staff, and student renters, which contributes to a neighborhood character that blends historic residential areas with active student housing zones. The city also benefits from its proximity to Lexington, positioning itself as a more affordable commuter town while maintaining its own distinct small-city infrastructure and retail corridors.
From a strictly numerical perspective, investors must confront a specific rent gap in this market. The HUD metro/county Fair Market Rent (FMR) for a 2-bedroom unit in FY2026 is set at $950, while current market rents (Zillow ZORI) average $1,061. This creates a gap of $111 per month, meaning voucher rates lag slightly behind the open market. Median home values sit at $297,054, but investors targeting two-bedroom assets can acquire properties for significantly less, with a median sale price of $202,195. Homes are moving moderately fast, with a median of 69 days on market. Under these conditions, voucher tenants do not offer an immediate cash-flow premium over market-rate tenants; instead, they pay slightly below the prevailing market rate.
Demand drivers, however, remain robust. The area boasts a 42.1% renter share, coupled with a median household income of $63,050, indicating a population that relies heavily on rental housing but possesses the earning capacity to support stable tenancies. While public transit options are limited compared to major metros, the local school system and proximity to the university create consistent demand. With incomes solid but home values climbing toward $300,000, many families are priced out of buying, sustaining a healthy pool of long-term renters who may qualify for or benefit from housing assistance programs.
The strongest investor angle in Richmond 40475 is stability and occupancy consistency rather than aggressive cash-flow. The $111 deficit between market rent and the FMR suggests investors should not rely on Section 8 to boost margins above market rates. However, the lower acquisition cost for 2-bedroom units ($202,195) compared to the overall median home value offers an entry point where the $950 FMR still likely covers debt service and operating expenses. This market is best suited for investors seeking reliable, government-backed income in a university town with a high renter population, rather than those chasing maximum yield.
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.