Location: Muhlenberg County, KY | Metro: Clarksville, TN-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 | $990 |
| 1 Bedroom | $990 |
| 2 Bedrooms | $1,220 |
| 3 Bedrooms | $1,690 |
| 4 Bedrooms | $2,040 |
| 5 Bedrooms | $2,366 |
| 6 Bedrooms | $2,650 |
| 7 Bedrooms | $2,862 |
| 8 Bedrooms | $3,005 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,690 | $229,806 | 0.74% | D |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 42464 reveals some interesting insights for landlords and small-portfolio investors. To start, the Fair Market Rent (FMR) for a two-bedroom apartment in this area for fiscal year 2024 is set at $890 annually. When compared to the median home value of $146,831, this translates into an implied gross yield of approximately 6.07%. This calculation is derived by dividing the annual rental income by the median home value.
On the other hand, using the market rent figure of $529 per month as reported by the Census Bureau's American Community Survey (ACS), the annualized market rent would be $6,348. Applying this to the median home value gives us an implied gross yield of roughly 4.32%. The difference between these yields highlights the premium that Section 8 can offer over market rates, making it a potentially attractive option for property owners looking to secure long-term tenants with stable income.
The renter density in ZIP 42464 stands at 17.8%, indicating a relatively low proportion of residents who rent their homes. However, this does not necessarily mean that the demand for rental properties is low. Given the high implied gross yield from the Section 8 scenario, it could be a viable strategy for landlords, especially considering the stability that comes with government-backed rental assistance programs.
The lack of available data on the days on market (DOM) suggests that there might be limited competition for rentals in this area, or that rental listings are not frequently updated online. In either case, the higher gross yield associated with Section 8 properties makes them more likely to be occupied quickly, which can be beneficial for landlords seeking steady cash flow.
In conclusion, while the market rent scenario provides a lower gross yield, the Section 8 scenario offers a higher gross yield of 6.07% versus 4.32% for market rent. Given the specific conditions in ZIP 42464, such as the low renter density and the potential for quick occupancy, the Section 8 option appears to be more realistic for achieving a higher and more stable return on investment.
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.