Location: Leslie County, KY | Metro: Harlan County, KY
| Unit Size | Monthly FMR |
|---|---|
| Studio | $690 |
| 1 Bedroom | $750 |
| 2 Bedrooms | $910 |
| 3 Bedrooms | $1,190 |
| 4 Bedrooms | $1,200 |
| 5 Bedrooms | $1,392 |
| 6 Bedrooms | $1,559 |
| 7 Bedrooms | $1,684 |
| 8 Bedrooms | $1,768 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 40810 reveals an interesting dynamic between Section 8 rental rates and market rents. With the annualized Fair Market Rent (FMR) for a two-bedroom apartment set at $870 for fiscal year 2026, and the market rent observed at $485 according to the Census ACS, we can derive some insights into the potential gross yield for landlords.
Firstly, let's consider the Section 8 scenario. Given the FMR of $870, if we assume that a landlord could potentially rent out a property at this rate, the annual rental income would be $870 multiplied by 12 months, equating to $10,440 per year. Against a median home value of $89,179, this translates to a gross yield of approximately 11.7%. This calculation is straightforward and does not account for any vacancy rates or operating expenses, which would reduce the net operating income (NOI).
In contrast, the market rent of $485 presents a different picture. If a landlord were to charge this rate, the annual rental income would be $485 times 12 months, resulting in $5,820 per year. When compared to the median home value of $89,179, this yields a gross income of about 6.5%. Clearly, the Section 8 rate offers a significantly higher gross yield, almost double that of the market rate.
However, the decision to participate in Section 8 should also consider the local rental market conditions. ZIP 40810 has a relatively low renter density at 14.0%, indicating that a substantial portion of the population might prefer homeownership over renting. This factor could impact the demand for rental properties, including those under the Section 8 program.
Another critical aspect is the Days on Market (DOM), which is listed as N/A in our dataset. The DOM figure is essential for understanding how quickly units are rented out and whether there might be prolonged periods of vacancy. Without this information, it's challenging to provide a precise forecast of vacancy rates, which directly affect the ROI.
In conclusion, while the Section 8 program provides a higher gross yield at around 11.7% compared to the market rate's 6.5%, the decision to participate should weigh the local rental dynamics. The low renter density suggests that landlords must carefully evaluate the demand for Section 8 rentals in this area before committing to the program. The lack of DOM data adds another layer of uncertainty to the investment decision, highlighting the need for thorough due diligence.
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.