Location: Whitley County, KY | Metro: Knox 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 | $660 |
| 1 Bedroom | $800 |
| 2 Bedrooms | $910 |
| 3 Bedrooms | $1,170 |
| 4 Bedrooms | $1,460 |
| 5 Bedrooms | $1,694 |
| 6 Bedrooms | $1,897 |
| 7 Bedrooms | $2,049 |
| 8 Bedrooms | $2,151 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,170 | $154,435 | 0.76% | D |
U.S. Census Bureau data (2024)
In evaluating whether to invest in ZIP code 40771 for Section 8 properties, follow this decision tree based on the provided data.
1) Does the Fair Market Rent ($870 per month for the metro area in fiscal year 2026) cover the debt service on a property valued at $137,017?
Yes: The FMR of $870 is sufficient to clear the debt service on a $137,017 property. This means that the rental income generated from a Section 8 tenant can meet the mortgage payments and other expenses associated with owning the property.
No: The FMR of $870 does not cover the debt service on a $137,017 property. In this case, it would not be financially viable to purchase the property solely relying on Section 8 tenants.
It Depends: If the property's value is less than $137,017, then the FMR of $870 might be enough to cover the debt service. Conversely, if the property is more expensive, then additional sources of income or subsidies would be necessary to make the investment profitable.
2) Is the market rent of $99 (as reported by the Census ACS) above, at, or below the FMR?
Above: With a market rent of $99 being significantly below the FMR of $870, there is a strong incentive to participate in the Section 8 program. The gap between market rent and FMR indicates potential for higher returns when compared to non-subsidized rentals.
At: If the market rent were exactly at the FMR, which it isn't in this case, it would suggest a neutral position where the landlord could choose between market and Section 8 rents based on other factors such as maintenance costs or tenant stability.
Below: Given that the market rent is well below the FMR, participating in Section 8 makes financial sense. Landlords can secure a stable income stream that exceeds what they could get from the local market.
3) Are 55.3% of residents renters and the number of days on the market (DOM) sufficient to ensure demand for Section 8 properties?
Yes: With 55.3% of residents being renters, there is a high demand for housing, and Section 8 properties will likely find tenants quickly. The N/A-day DOM suggests either a lack of data or that properties are rented out rapidly, indicating a robust rental market.
No: If the percentage of renters were lower, or if properties had a long DOM, this would indicate a weaker demand for rentals. However, since the percentage of renters is high, this branch is unlikely to apply to ZIP 40771.
It Depends: While the high percentage of renters supports demand, the absence of DOM data leaves some uncertainty. A landlord should consider the broader economic context and any trends in rental vacancy rates to make an informed decision.
The analysis concludes that ZIP 40771 presents a favorable environment for Section 8 investments, given that the FMR covers debt service, market rents are below the FMR, and the majority of residents are renters. However, landlords must also consider the specific conditions of individual properties and the overall market dynamics.
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.