Location: Marshall County, KY | Metro: Calloway County, KY
| Unit Size | Monthly FMR |
|---|---|
| Studio | $710 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $990 |
| 3 Bedrooms | $1,280 |
| 4 Bedrooms | $1,310 |
| 5 Bedrooms | $1,520 |
| 6 Bedrooms | $1,702 |
| 7 Bedrooms | $1,838 |
| 8 Bedrooms | $1,930 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 42048 reveals a complex picture that can help guide investment decisions for landlords and small-portfolio investors. The Federal Market Rent (FMR) for a 2-bedroom apartment in ZIP 42048, as of FY 2026, is set at $970 annually. This figure represents the amount landlords can expect to receive per month through the Section 8 program for a 2-bedroom unit. In contrast, the market rent for a similar property, according to the Census ACS, stands at $803 annually.
To derive the implied gross-yield, we must first calculate the annual rental income based on these figures. For the Section 8 scenario, multiplying the monthly FMR by 12 gives an annual rental income of $11,640. For the market rent scenario, the annual income is $9,636. Given the median home value in ZIP 42048 is $144,680, we can calculate the gross-yield by dividing the annual rental income by the median home value.
In the Section 8 scenario, the gross-yield is calculated as follows: $11,640 / $144,680 = 0.0804, or approximately 8.04%. For the market rent scenario, the gross-yield is $9,636 / $144,680 = 0.0666, or roughly 6.66%. These yields provide a baseline for comparing potential investment returns between participating in the Section 8 program versus renting at market rates.
The 20.7% renter density in ZIP 42048 suggests that while there is a significant portion of the population renting, it also indicates a sizeable number of homeowners. This mix can influence the demand for rental properties, including those under the Section 8 program. However, the lack of data on days on market (DOM) makes it challenging to assess the speed at which units might be leased, particularly under Section 8. Despite this limitation, the higher gross-yield from the Section 8 program, at 8.04%, compared to the market rent yield of 6.66%, implies a stronger financial performance if the unit can be leased promptly.
Given the higher gross-yield from the Section 8 program, it presents a more attractive option for landlords and small-portfolio investors looking to maximize their returns. However, the decision should consider the administrative requirements and potential challenges of leasing to Section 8 tenants, such as longer lease terms and government oversight. The market rent scenario, while offering a lower gross-yield, might be preferred by investors who seek less regulatory involvement and quicker turnover rates.
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.