Location: Graves County, KY | Metro: Calloway 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 | $740 |
| 1 Bedroom | $770 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,200 |
| 4 Bedrooms | $1,330 |
| 5 Bedrooms | $1,543 |
| 6 Bedrooms | $1,728 |
| 7 Bedrooms | $1,866 |
| 8 Bedrooms | $1,959 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,010 | $130,132 | 0.78% | D |
| 3BR | $1,200 | $173,895 | 0.69% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 42049 in Hazel, KY, reveals some interesting insights into potential investment opportunities. The Fair Market Rent (FMR) for a 2-bedroom apartment in the area, as of FY 2026, is set at $980 annually. Using this figure, the implied gross yield for a property valued at the median home value of $148,526 would be approximately 6.6%. This calculation is derived by dividing the annualized rent ($980) by the median home value ($148,526).
However, the market rent for a 2-bedroom unit in the same area is reported at $730 annually based on Census ACS data. If we use this market rent figure, the implied gross yield drops significantly to about 4.9%. This lower yield is calculated similarly, by dividing the annual market rent ($730) by the median home value ($148,526).
The disparity between these two yields highlights the importance of understanding the local rental market dynamics. With a renter density of 22.7%, it suggests that while there is a notable portion of renters in the area, the majority of households still prefer homeownership. This could impact the demand for rental properties, particularly those participating in the Section 8 program.
The N/A-day DOM (Days on Market) indicates incomplete data regarding how quickly properties are rented out. Despite this, the market rent scenario is likely more realistic for most investors. While the FMR scenario offers a higher gross yield, it's important to consider the actual market conditions and the willingness of tenants to pay higher rents, especially when the majority of the population opts for homeownership.
In conclusion, while the FMR-based gross yield of 6.6% is appealing, the market rent-based gross yield of 4.9% provides a more grounded expectation for investment returns in ZIP 42049. Investors should factor in the local rental market trends and the specific characteristics of the Section 8 program when making their investment decisions.
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.