Location: Pickett County, TN | Metro: Clinton 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 | $710 |
| 1 Bedroom | $760 |
| 2 Bedrooms | $1,000 |
| 3 Bedrooms | $1,190 |
| 4 Bedrooms | $1,390 |
| 5 Bedrooms | $1,612 |
| 6 Bedrooms | $1,805 |
| 7 Bedrooms | $1,949 |
| 8 Bedrooms | $2,046 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,000 | $112,172 | 0.89% | C |
| 3BR | $1,190 | $171,884 | 0.69% | D |
| 4BR | $1,390 | $240,102 | 0.58% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis for real estate investment in ZIP code 42602, specifically centered around Albany, KY, highlights a significant financial opportunity due to the disparity between the Fair Market Rent (FMR) and the actual market rent. The FMR for the metro area in fiscal year 2026 is set at $930, while the Census ACS reports an average market rent of $619. This creates a gap of $311 per month, or approximately 33%, where landlords can leverage the federal housing assistance program to their advantage.
Given that the FMR exceeds the market rent, this scenario makes the ZIP code a prime yield play for voucher tenants. Landlords who participate in the Section 8 program can secure rental incomes that are significantly higher than what the local market offers. This means that even though the initial investment might seem modest given the median home value of $156,167, the long-term rental income potential is substantial. With only 29.8% of residents being renters, there is a lower competition for rental properties, making it easier for landlords to fill units with Section 8 tenants.
The median income in Albany, KY, stands at $44,375, which aligns well with the income eligibility criteria for Section 8 vouchers. This ensures a steady stream of qualified tenants looking for affordable housing options. By accepting Section 8 tenants, landlords can benefit from guaranteed monthly payments that are closer to the FMR, thereby increasing their net operating income and overall property yield.
However, it's important to note that participating in the Section 8 program also comes with responsibilities and potential costs. Landlords must ensure that their properties meet certain quality standards, and they may face challenges such as longer lease terms and less flexibility in choosing tenants. Despite these considerations, the financial benefits of closing the gap between the FMR and market rent make it a compelling strategy for maximizing returns in ZIP 42602.
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.