Location: Floyd County, KY | Metro: Floyd County, KY
| Unit Size | Monthly FMR |
|---|---|
| Studio | $810 |
| 1 Bedroom | $870 |
| 2 Bedrooms | $1,140 |
| 3 Bedrooms | $1,520 |
| 4 Bedrooms | $1,540 |
| 5 Bedrooms | $1,786 |
| 6 Bedrooms | $2,000 |
| 7 Bedrooms | $2,160 |
| 8 Bedrooms | $2,268 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate scenario for ZIP code 41619 reveals a distinct gap between the federal market rent (FMR) and the actual market rent, providing two different gross-yield pictures for potential investors.
Based on the Federal Market Rent (FMR) for a 2-bedroom apartment at $1,120 per month, the annualized income would be $13,440. This figure, when compared to the median home value of $75,674, implies a gross-yield of approximately 17.76%. The calculation is straightforward:
However, using the Census ACS reported market rent of $598 per month for a 2-bedroom unit, the annualized income drops to $7,176. This translates to a gross-yield of about 9.48%:
The significant difference in gross-yield between these two scenarios highlights the importance of understanding the local rental market dynamics. While the FMR-based yield appears more attractive at 17.76%, it's important to consider that only 22.8% of the population in ZIP 41619 are renters. This low renter density suggests that the number of potential Section 8 tenants might be limited, making the higher FMR-based yield less likely to be achieved consistently over time.
The market rent-based yield of 9.48% provides a more realistic expectation for investors, especially given the limited data on days on market (DOM), which is listed as N/A. A lower yield is indicative of the current market conditions and the actual demand for rental properties. It's crucial for investors to align their expectations with the actual market conditions rather than relying solely on government-set rates.
In conclusion, while the FMR offers a higher gross-yield, the market rent reflects the true economic environment of ZIP 41619, offering a more reliable basis for investment decisions. Landlords and small-portfolio investors should carefully consider the local rental market and the percentage of renters before making investment choices based on the projected yields.
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.