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: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,080 | $195,090 | 0.55% | F |
U.S. Census Bureau data (2024)
A landlord considering purchasing a property in ZIP code 40740 for Section 8 must follow a structured decision-making process based on financial metrics and market conditions.
Step 1: Determine if the Fair Market Rent (FMR) of $870 per month can cover the debt service on a property valued at $156,299. To calculate this, you need to know the monthly mortgage payment, including principal, interest, taxes, and insurance. For a property of this value, assuming a typical 20% down payment and a 30-year fixed-rate mortgage at an average interest rate, the monthly payment would be around $600-$700. With an additional $170 for property taxes and insurance, the total debt service would be approximately $770-$870. Therefore, the FMR of $870 could just about cover the debt service, making this a viable option under current financial conditions.
Step 2: Evaluate whether the market rent of $734 is above, at, or below the FMR. In this case, the market rent is slightly below the FMR. This indicates that landlords might struggle to find tenants willing to pay the higher Section 8 rates, potentially leading to vacancies. However, the gap between the market rent and FMR is relatively narrow, suggesting that the risk is manageable.
Step 3: Assess the rental demand in the area. The data shows that 36.2% of residents are renters. Unfortunately, the Days on Market (DOM) data is unavailable, which makes it difficult to gauge how quickly properties are rented out. Despite this lack of information, the high percentage of renters suggests a strong demand for rental properties. However, without DOM data, it's impossible to determine the speed at which properties are occupied, which is crucial for cash flow planning.
In conclusion, while the financial metrics indicate that purchasing a property in ZIP 40740 for Section 8 is feasible, the decision ultimately hinges on the landlord's risk tolerance regarding potential vacancy periods and the speed at which rental properties are filled. The strong rental demand is a positive sign, but the lack of DOM data introduces uncertainty into the equation.
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.