Location: Pine County, MN | Metro: Minneapolis-St. Paul-Bloomington, MN-WI 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 | $1,120 |
| 1 Bedroom | $1,270 |
| 2 Bedrooms | $1,540 |
| 3 Bedrooms | $2,040 |
| 4 Bedrooms | $2,280 |
| 5 Bedrooms | $2,645 |
| 6 Bedrooms | $2,962 |
| 7 Bedrooms | $3,199 |
| 8 Bedrooms | $3,359 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,540 | $241,850 | 0.64% | D |
| 3BR | $2,040 | $286,087 | 0.71% | D |
| 4BR | $2,280 | $326,017 | 0.7% | D |
U.S. Census Bureau data (2024)
A skeptical investor considering ZIP 55006, Braham, MN, might raise several concerns regarding the viability of investing in rental properties. Here, we address these concerns with the available data.
Objection 1: Will FMR $1270 (zip FY 2024) cover the mortgage on a $271,808 home?
The Fair Market Rent (FMR) for ZIP 55006 is set at $1270 for fiscal year 2024. To determine if this covers a mortgage on a home priced at $271,808, consider the typical mortgage terms. Assuming a 30-year fixed-rate mortgage with an interest rate of 4.5%, the monthly payment on a $271,808 home would be approximately $1375. This means that the FMR alone does not cover the mortgage payment, falling short by about $105 per month. However, it's important to note that the FMR is intended to reflect the average rent for a moderate-quality rental unit, not necessarily the maximum rent that can be charged. Investors might find ways to increase rent above the FMR to cover mortgage payments.
Objection 2: Is there enough renter demand at 17.4%?
The percentage of households renting in ZIP 55006 stands at 17.4%. This figure suggests a relatively low renter population compared to areas with higher percentages. However, the actual number of renters depends on the total household count. If the total number of households is high, even a lower percentage can represent a significant pool of potential tenants. The data does not provide the total number of households, so it's difficult to quantify the exact number of renters. Nevertheless, a lower renter percentage could indicate less competition among landlords, potentially leading to more stable tenancy relationships.
Objection 3: Will vouchers keep pace with $844 market rents?
The Housing Choice Voucher program, often referred to as Section 8, aims to help low-income families afford decent housing. In ZIP 55006, the average market rent is $844. While the voucher amount can vary based on income and family size, it generally covers a portion of the rent. The data does not specify the exact voucher amounts for this area. However, it's crucial to understand that voucher holders often have strict income limits, which can affect their ability to cover additional costs beyond what the voucher provides. Therefore, relying solely on voucher holders to meet the $844 market rent might not be feasible without charging the tenant a substantial portion of the difference.
In summary, while the FMR does not fully cover the mortgage on a median-priced home, strategies to charge above the FMR can mitigate this issue. The renter demand, though seemingly low at 17.4%, could still support a niche market for landlords. Lastly, the voucher system may not keep pace with market rents, necessitating careful consideration of tenant selection and rent structuring.
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.