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 | $970 |
| 1 Bedroom | $1,180 |
| 2 Bedrooms | $1,390 |
| 3 Bedrooms | $1,910 |
| 4 Bedrooms | $2,070 |
| 5 Bedrooms | $2,401 |
| 6 Bedrooms | $2,689 |
| 7 Bedrooms | $2,904 |
| 8 Bedrooms | $3,049 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,390 | $194,545 | 0.71% | D |
| 3BR | $1,910 | $290,836 | 0.66% | D |
| 4BR | $2,070 | $466,601 | 0.44% | F |
U.S. Census Bureau data (2024)
The potential risks for Section 8 landlords in ZIP code 40516, Lexington, KY, include significant tenant turnover due to the gap between the market rent of $1,114 and the Fair Market Rent (FMR) of $1,380 for FY 2024. This disparity can lead to higher vacancy rates, as tenants who qualify for Section 8 vouchers might struggle to find units that match their budget. With no available data on days on market (DOM), it's challenging to predict how long properties might remain vacant, adding uncertainty to cash flow expectations.
The deferred maintenance risk is also notable, considering the average home value of $336,111 and a median income of $84,510. Landlords must be prepared to invest in property upkeep, as tenants receiving rental assistance may have limited funds for repairs and maintenance. The financial burden of maintaining properties to meet housing quality standards can be substantial, especially when the income does not cover the costs of regular maintenance.
However, these risks are somewhat mitigated by the high renter density in the area, with 18.7% of residents being renters. High renter density typically correlates with a greater demand for rental assistance, which can benefit landlords by ensuring a pool of qualified tenants looking for affordable housing options. This demand can help stabilize occupancy rates and reduce the likelihood of prolonged vacancies.
In conclusion, the overall risk for a first-time Section 8 landlord in ZIP 40516 is moderate.
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.