Location: Bayfield County, WI | Metro: Duluth, MN-WI MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $770 |
| 1 Bedroom | $890 |
| 2 Bedrooms | $1,110 |
| 3 Bedrooms | $1,530 |
| 4 Bedrooms | $1,870 |
| 5 Bedrooms | $2,169 |
| 6 Bedrooms | $2,429 |
| 7 Bedrooms | $2,623 |
| 8 Bedrooms | $2,754 |
U.S. Census Bureau data (2024)
A skeptical investor considering ZIP 54820 might raise several concerns regarding the feasibility of investing in a property here under the Section 8 program. Here are the most common objections and the data that addresses them.
Objection 1: Will FMR $1000 (zip FY 2024) cover the mortgage on a $254,514 home?
To evaluate this concern, we need to consider the current mortgage rates and the potential monthly mortgage payment. According to recent mortgage rate data, the average 30-year fixed mortgage rate is around 6.5%. Assuming a 20% down payment on a $254,514 home, the principal amount financed would be $203,611.20. At an interest rate of 6.5%, the estimated monthly mortgage payment would be approximately $1,267. This figure exceeds the $1,000 Fair Market Rent (FMR) for ZIP 54820 in FY 2024, indicating that the FMR alone would not fully cover the mortgage payment. However, investors should consider additional sources of income, such as property appreciation and potential rental increases, to offset this initial shortfall.
Objection 2: Is there enough renter demand at 13.6%?
The renter demand percentage of 13.6% suggests that a significant portion of the housing stock in ZIP 54820 is occupied by renters. While this percentage is lower than the national average, it still represents a substantial market share. Given that the area is 100% rural, with a population density slightly below average, the demand for rental properties remains steady. Additionally, the unemployment rate in ZIP 54820 is below the state average, which indicates a stable job market and potentially reliable tenants. Therefore, while the demand is not exceptionally high, it is sufficient to support a rental property investment.
Objection 3: Will vouchers keep pace with $855 market rents?
The FMR for ZIP 54820 is set at $1,000 for FY 2024, which is above the current market rent of $855. This suggests that the voucher system is likely to cover the actual rent charged, providing a buffer against inflationary pressures. However, it is important to note that the FMR is a guideline and may not reflect the exact rent paid by all voucher holders. To ensure long-term viability, investors should monitor local economic trends and the performance of the voucher system. The data does not provide a comprehensive forecast, but the current alignment between FMR and market rents is positive.
In conclusion, while there are valid concerns regarding the coverage of mortgage payments by FMR and the level of renter demand, the data supports the feasibility of investing in ZIP 54820 under the Section 8 program. Vouchers are likely to remain competitive with market rents, ensuring a stable source of income for landlords and small-portfolio investors.
Data Sources: FMR data from HUD (2027). 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.