Location: Lexington-Fayette, KY | Metro: Lexington-Fayette, KY MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,380 |
| 1 Bedroom | $1,690 |
| 2 Bedrooms | $1,980 |
| 3 Bedrooms | $2,720 |
| 4 Bedrooms | $2,950 |
| 5 Bedrooms | $3,422 |
| 6 Bedrooms | $3,833 |
| 7 Bedrooms | $4,140 |
| 8 Bedrooms | $4,347 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 program in ZIP code 40514, located in Lexington, KY, reveals a significant gap between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR in ZIP 40514 is set at $1610, while the market rent, as measured by ZORI (Zillow Observed Rent Index), stands at $1850. This results in a $240 difference, or approximately 14.9% below the market rate.
The discrepancy means that landlords and small-portfolio investors who accept Section 8 vouchers will be renting their properties below the open-market rates. In Lexington, where 26.0% of residents are renters and the median home value is $368,951, the decision to participate in the Section 8 program must be weighed against the financial implications. Given the median income in the area is $95,914, the lower rental income from Section 8 tenants can affect an investor's overall yield.
To put this into perspective, if you own a property in ZIP 40514 and choose to rent it through the Section 8 program, you will receive $1610 per month instead of the potential $1850. This $240 shortfall each month translates into a considerable loss over a year, amounting to $2880. It is essential to consider how this reduction impacts your investment strategy and cash flow.
The decision to rent to Section 8 tenants should be made with an understanding of the broader economic context of Lexington, KY. While the program provides a steady stream of rental income guaranteed by the government, the trade-off is accepting a lower rent compared to what the market would offer. Therefore, for landlords and small-portfolio investors, the Section 8 program in ZIP 40514 does not represent a yield play but rather an opportunity to serve a segment of the population at a cost below the prevailing market rates.
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.