Location: Union County, KY | Metro: Henderson 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 | $700 |
| 2 Bedrooms | $910 |
| 3 Bedrooms | $1,100 |
| 4 Bedrooms | $1,280 |
| 5 Bedrooms | $1,485 |
| 6 Bedrooms | $1,663 |
| 7 Bedrooms | $1,796 |
| 8 Bedrooms | $1,886 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,100 | $143,391 | 0.77% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 42461 reveals a mixed picture when comparing the federally mandated Fair Market Rent (FMR) to the actual market rent. For a two-bedroom unit, the FMR set by HUD for fiscal year 2024 is $940 per month. If we annualize this figure, it amounts to $11,280 annually. Given the median home value in ZIP 42461 is $98,796, the implied gross yield using the FMR would be approximately 11.42%. This calculation is based on the formula: Gross Yield = (Annualized Rent / Median Home Value).
In contrast, the Census Bureau's American Community Survey (ACS) reports an average market rent of $609 per month for ZIP 42461. When annualized, this translates to $7,308 annually. Using the same median home value, the implied gross yield under market conditions is about 7.4%. Clearly, the FMR scenario presents a higher gross yield compared to the market rent scenario.
The higher gross yield under the FMR scenario is theoretically appealing; however, its practicality hinges on several factors. First, the renter density in ZIP 42461 stands at 32.3%, indicating that less than one-third of households are renters. This relatively low renter population suggests that landlords might face challenges in filling units, particularly those seeking Section 8 tenants. Moreover, the N/A-day DOM (days on market) implies that there is limited data available regarding how long rental properties typically remain vacant before being rented out. This lack of data makes it difficult to assess the speed at which a landlord can expect to fill a vacancy.
Given these considerations, the market rent scenario appears more realistic for most landlords and small-portfolio investors. While the gross yield is lower at 7.4%, it reflects the actual rental environment in ZIP 42461 and is likely to provide a more stable and predictable income stream. The FMR scenario, while offering a higher gross yield, does not account for the potential difficulties in finding and retaining Section 8 tenants, nor does it consider the impact of a lower renter density on occupancy rates.
Investors should carefully weigh these factors when deciding whether to participate in the Section 8 program in ZIP 42461. The choice between pursuing higher yields through Section 8 or accepting lower yields with greater stability depends on individual risk tolerance and investment goals. However, for the majority of investors, aligning with market rents may offer a safer bet in terms of consistent cash flow and property occupancy.
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.