Location: Magoffin County, KY | Metro: Floyd 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 | $670 |
| 1 Bedroom | $730 |
| 2 Bedrooms | $930 |
| 3 Bedrooms | $1,210 |
| 4 Bedrooms | $1,270 |
| 5 Bedrooms | $1,473 |
| 6 Bedrooms | $1,650 |
| 7 Bedrooms | $1,782 |
| 8 Bedrooms | $1,871 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,210 | $91,869 | 1.32% | A |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 41640 provides a critical insight into the potential returns for landlords and small-portfolio investors. With the median home value set at $69,051, we can derive two scenarios based on the available data.
In the first scenario, using the annualized Fair Market Rent (FMR) for a 2-bedroom unit of $880 (FY 2026, metro), the implied gross yield is calculated as follows:
This suggests that if a landlord were to rely solely on Section 8 vouchers for rental income, they could expect an annual gross yield of approximately 15.3%. However, this figure does not account for vacancy rates, maintenance costs, or other operational expenses, which would reduce the net operating income (NOI).
The second scenario involves the market rent, which is currently not available (N/A). Without specific market rent data, it's challenging to provide a precise gross yield. However, it's important to note that market rents often exceed the FMR set by Section 8, potentially offering higher gross yields.
To determine which scenario is more realistic, consider the local rental market conditions. The ZIP code 41640 has a renter density of 16.5%, indicating that a significant portion of the population owns homes rather than renting. This lower renter density might suggest a less competitive rental market, making it plausible that market rents could be higher than the FMR. However, the lack of data on the days-on-market (DOM) makes it difficult to predict how quickly a property could be leased at market rates.
In conclusion, while the Section 8 voucher scenario offers a clear gross yield of about 15.3%, the absence of market rent data prevents a direct comparison. Investors should gather additional local market information to assess the likelihood of achieving higher gross yields through market rentals. Given the limited data on DOM, it's reasonable to assume that securing tenants at market rates might take longer, impacting cash flow and overall investment performance.
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.