Location: Pike County, KY | Metro: Pike 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 | $780 |
| 1 Bedroom | $860 |
| 2 Bedrooms | $1,120 |
| 3 Bedrooms | $1,340 |
| 4 Bedrooms | $1,860 |
| 5 Bedrooms | $2,158 |
| 6 Bedrooms | $2,417 |
| 7 Bedrooms | $2,610 |
| 8 Bedrooms | $2,741 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,340 | $116,938 | 1.15% | B |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 41562 provides valuable insights into potential investment opportunities for landlords and small-portfolio investors. Based on the data provided, the Federal Market Rent (FMR) for a 2-bedroom unit in fiscal year 2026 is set at $1,000 annually, while the market rent, according to the Census ACS, stands at $1,267 per month.
To derive the cap rate, we first calculate the gross yield for each scenario. For the Section 8 FMR, the annual rent of $1,000 translates to a gross yield of approximately 1.12%. This is calculated by dividing the annual rent by the median home value ($89,720), which gives us the percentage of the home's value that can be earned annually through Section 8 rental income.
In contrast, the market rent of $1,267 per month equates to an annual rent of $15,204, leading to a gross yield of roughly 17.0%. This figure is derived similarly by dividing the annual market rent by the median home value.
Given the 27.8% renter density in ZIP 41562, it is important to consider the likelihood of securing tenants at market rates versus the guaranteed but lower Section 8 rates. The gross yield from market rents is significantly higher, making it a more attractive option for investors seeking immediate returns. However, the stability and security offered by Section 8 contracts cannot be overlooked, especially in areas with high renter turnover.
The absence of data on the number of days on market (DOM) complicates the analysis further. Typically, a lower DOM would indicate a faster lease-up time, reducing the risk associated with vacancy periods. In the absence of this information, we must rely on the existing data points to inform our decision-making process.
In summary, while the market rent scenario offers a much higher gross yield of 17.0%, the Section 8 FMR scenario provides a more stable, albeit lower, gross yield of 1.12%. The choice between these options should be guided by individual investor risk tolerance and long-term strategic goals.
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.