Location: Lexington-Fayette, 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 | $1,090 |
| 1 Bedroom | $1,330 |
| 2 Bedrooms | $1,560 |
| 3 Bedrooms | $2,150 |
| 4 Bedrooms | $2,320 |
| 5 Bedrooms | $2,691 |
| 6 Bedrooms | $3,014 |
| 7 Bedrooms | $3,255 |
| 8 Bedrooms | $3,418 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,560 | $260,308 | 0.6% | F |
| 3BR | $2,150 | $302,388 | 0.71% | D |
| 4BR | $2,320 | $379,876 | 0.61% | D |
| 5BR | $2,691 | $484,004 | 0.56% | F |
U.S. Census Bureau data (2024)
ZIP 40511, located in Lexington, KY, is an ideal choice for inclusion in a Section 8 portfolio strategy as a cash-flow anchor. This classification is supported by the significant spread between the Fair Market Rent (FMR) of $1300 for the fiscal year 2024 and the median market rent of $1,879. This means that landlords can expect to collect a higher rent from tenants who do not rely solely on Section 8 vouchers, thereby ensuring a stable and predictable cash flow.
The median home value in ZIP 40511 stands at $310,875, which provides a solid base for property investments. However, the key metric for determining its role as a cash-flow anchor is the FMR versus the market rent. Given that the FMR is significantly lower than the market rent, landlords can secure a reliable source of income through Section 8 participants while still having the flexibility to rent out properties at market rates to non-voucher holders. This dual-income approach helps stabilize the overall financial performance of the portfolio.
The data also indicates a low price-cut share of 0.2%, suggesting that the market is relatively strong and sellers are less likely to reduce their asking prices. Additionally, the Days on Market (DOM) figure of 21 days points to a brisk sales environment where homes are moving quickly. While these factors might suggest potential for appreciation, the primary focus here should be on the cash-flow stability that ZIP 40511 offers. The median income of $79,540 further supports the notion that this area has a diverse economic profile, which can help attract a mix of tenants, including those who can afford market rents.
In conclusion, ZIP 40511 serves best as a cash-flow anchor within a Section 8 portfolio strategy due to its favorable spread between FMR and market rent, along with its robust real estate market indicators. Landlords and small-portfolio investors can leverage this to create a balanced and financially resilient investment strategy.
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.