Location: Lewis County, KY | Metro: Lewis 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 | $720 |
| 1 Bedroom | $770 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,280 |
| 4 Bedrooms | $1,410 |
| 5 Bedrooms | $1,636 |
| 6 Bedrooms | $1,832 |
| 7 Bedrooms | $1,979 |
| 8 Bedrooms | $2,078 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,010 | $116,450 | 0.87% | C |
| 3BR | $1,280 | $158,229 | 0.81% | C |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 41189, located in Tollesboro, KY, provides insight into the potential returns for landlords and small-portfolio investors. To begin, we annualize the Fair Market Rent (FMR) for a two-bedroom unit, which is set at $940 per month for fiscal year 2026, based on the metropolitan area standards. This translates to an annual rent of $11,280.
In contrast, the market rent for a similar two-bedroom unit, according to the Census ACS, stands at $906 per month, resulting in an annual rent of $10,872. Given the median home value in the area is $139,734, we can calculate the implied gross yield for both scenarios.
For the FMR scenario, the gross yield is calculated as follows:
For the market rent scenario, the gross yield is:
Considering the 15.9% renter density in ZIP 41189, the FMR scenario appears more realistic. The higher renter density suggests a greater likelihood of finding tenants willing to pay the higher FMR rate, rather than the lower market rent. However, the lack of available days-on-market (DOM) data makes it difficult to assess the speed at which properties might be leased at either rate.
Landlords should note that while the FMR-based gross yield of 8.1% offers a slightly better return compared to the market rent-based gross yield of 7.8%, they must also consider the potential challenges of managing Section 8 properties. These include compliance with HUD regulations, potential delays in rental payments, and the need for regular inspections.
In conclusion, the FMR rate presents a more favorable gross yield for landlords in ZIP 41189, assuming they can secure tenants willing to pay this amount. However, the actual net operating income (NOI) will depend on the landlord's ability to manage these properties effectively and navigate the complexities associated with Section 8 tenancy.
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.