Location: Laurel County, KY | Metro: Laurel 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 | $650 |
| 1 Bedroom | $720 |
| 2 Bedrooms | $910 |
| 3 Bedrooms | $1,080 |
| 4 Bedrooms | $1,270 |
| 5 Bedrooms | $1,473 |
| 6 Bedrooms | $1,650 |
| 7 Bedrooms | $1,782 |
| 8 Bedrooms | $1,871 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $910 | $135,017 | 0.67% | D |
| 3BR | $1,080 | $200,401 | 0.54% | F |
| 4BR | $1,270 | $275,548 | 0.46% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 40729, located in East Bernstadt, Kentucky, provides valuable insights into potential investment opportunities. Using the Federal Market Rent (FMR) for a 2-bedroom apartment at $880 annually and the Census ACS-reported market rent of $693 per month, we can calculate the implied gross yields against the median home value of $153,800.
First, let's consider the scenario using the FMR. The annualized FMR for a 2BR unit is $10,560 ($880 x 12 months). This translates to an implied gross yield of approximately 6.87% when calculated against the median home value of $153,800. To find this, we divide the annual rent by the median home value: $10,560 / $153,800 = 0.0687, or 6.87%. This calculation assumes that the property is valued at the median home value and leased at the FMR rate.
Next, we look at the market rent scenario. With a monthly market rent of $693, the annualized rent is $8,316 ($693 x 12 months). The implied gross yield in this case is about 5.41%, calculated as $8,316 / $153,800 = 0.0541, or 5.41%. This figure represents the yield if the property were leased at the average market rate rather than the FMR.
Given the 16.8% renter density in the area, it is important to note that the majority of homeownership in ZIP 40729 suggests a lower likelihood of high demand for rental properties, especially those under Section 8 contracts. However, the N/A-day Days on Market (DOM) indicates that there is limited data available regarding how quickly rental units are typically filled, which could imply either strong or weak demand depending on the context.
The FMR scenario presents a higher gross yield of 6.87%, compared to the market rent scenario's 5.41%. While the FMR-based yield is more attractive, it is essential to consider the actual market conditions. The 16.8% renter density suggests that the market rent scenario might be more realistic, as it aligns better with the local housing market dynamics. Despite this, the higher yield from the FMR scenario could still be achievable if the landlord secures Section 8 tenants efficiently.
In conclusion, while the FMR-based gross yield of 6.87% offers a more appealing return, the market rent scenario's yield of 5.41% may reflect the true potential of rental income in ZIP 40729. Investors should carefully weigh these factors and consider the specifics of the local rental market before making investment decisions.
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.