Location: Ballard County, KY | Metro: Ballard County, KY HUD Metro FMR Area
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 | $910 |
| 1 Bedroom | $990 |
| 2 Bedrooms | $1,300 |
| 3 Bedrooms | $1,550 |
| 4 Bedrooms | $1,710 |
| 5 Bedrooms | $1,984 |
| 6 Bedrooms | $2,222 |
| 7 Bedrooms | $2,400 |
| 8 Bedrooms | $2,520 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,300 | $110,979 | 1.17% | B |
| 3BR | $1,550 | $192,028 | 0.81% | C |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 42056, located in La Center, KY, provides insight into potential investment yields under different rental assumptions.
First, using the Fair Market Rent (FMR) for a two-bedroom apartment, which is set at $1,240 annually for fiscal year 2026, we can calculate the implied gross yield. With a median home value of $121,160, the annualized Section 8 rent would equate to a gross yield of approximately 1.02%. This calculation is straightforward: $1,240 divided by $121,160 equals 0.0102, or 1.02%. However, this scenario assumes that the property can be rented out under the Section 8 program at the specified rate.
In contrast, the lack of available market rent data for the area presents a challenge for accurately determining the gross yield under market conditions. The absence of this information means that it's difficult to provide a precise comparison between market rents and Section 8 rents. Given the limited data, we cannot confidently state the market rent-based gross yield for ZIP 42056.
Despite the incomplete market rent data, the 17.6% renter density suggests a moderate level of demand for rental properties in La Center, KY. However, without knowing the typical days on market (DOM), it's challenging to assess how quickly properties might be leased and at what price. A high DOM could indicate lower demand or difficulty in leasing, which would affect the viability of both Section 8 and market rental strategies.
The gross yield derived from the Section 8 FMR is quite low compared to what investors typically seek in real estate investments. For instance, a gross yield of 1.02% is substantially below the average expected returns from traditional rental properties or other investment opportunities. This makes the Section 8 scenario less attractive purely from a yield perspective.
However, the Section 8 program offers stability through government-subsidized rent payments, which can be particularly appealing to landlords and small-portfolio investors seeking consistent income streams. The trade-off here is between the higher risk associated with market rentals and the lower but stable returns from Section 8.
Given the current data, the most realistic scenario for investors is likely to consider the Section 8 gross yield as a conservative baseline, while recognizing that actual market yields could vary significantly depending on local rental dynamics and property management practices. Investors should conduct thorough due diligence and factor in the unique characteristics of the La Center, KY, market when making 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.