Location: Graves County, KY | Metro: Graves 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 | $840 |
| 1 Bedroom | $890 |
| 2 Bedrooms | $1,170 |
| 3 Bedrooms | $1,570 |
| 4 Bedrooms | $1,630 |
| 5 Bedrooms | $1,891 |
| 6 Bedrooms | $2,118 |
| 7 Bedrooms | $2,287 |
| 8 Bedrooms | $2,401 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,170 | $152,058 | 0.77% | D |
| 3BR | $1,570 | $242,814 | 0.65% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 42051, located in Hickory, KY, reveals some interesting dynamics when comparing the Federal Market Rent (FMR) for a two-bedroom unit set at $1,110 annually (for FY 2026, metropolitan area) against the actual market rent reported at $928 annually based on Census ACS data. The median home value in this area stands at $198,844.
To calculate the implied gross yield, we first need to annualize the rents. For the FMR scenario, the annual rent would be $1,110 multiplied by 12, equating to $13,320 per year. Dividing this by the median home value gives us an implied gross yield of approximately 6.7%. Conversely, using the market rent figure of $928 per month, the annual rent is $11,136, leading to an implied gross yield of about 5.6%.
The gross yield comparison between the FMR and market rent scenarios highlights a significant difference, favoring the FMR scenario by nearly 1.1 percentage points. However, it's important to consider the local rental market conditions when determining which scenario is more realistic. With a renter density of just 7.7%, it suggests that the majority of homeowners in ZIP 42051 are likely owner-occupiers rather than landlords. This low renter density could imply a limited demand for rental properties, making the lower market rent scenario more plausible.
The fact that the days on market (DOM) is listed as N/A also provides insight into the rental market dynamics. Typically, a high DOM indicates difficulty in renting out properties, which might support the lower market rent scenario. However, without specific DOM data, it's challenging to draw a definitive conclusion. Given the available data, the market rent scenario appears to be a more accurate representation of the rental income potential in ZIP 42051.
In summary, while the FMR scenario offers a higher gross yield of 6.7%, the actual market conditions, particularly the low renter density, suggest that the market rent scenario with a gross yield of 5.6% is more reflective of the true rental income potential for landlords and small-portfolio investors in Hickory, KY.
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.