Location: Pine County, MN | Metro: Kanabec County, MN
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 | $800 |
| 1 Bedroom | $930 |
| 2 Bedrooms | $1,100 |
| 3 Bedrooms | $1,430 |
| 4 Bedrooms | $1,570 |
| 5 Bedrooms | $1,821 |
| 6 Bedrooms | $2,040 |
| 7 Bedrooms | $2,203 |
| 8 Bedrooms | $2,313 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,100 | $230,763 | 0.48% | F |
| 3BR | $1,430 | $291,209 | 0.49% | F |
| 4BR | $1,570 | $336,325 | 0.47% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 55007 in Minnesota reveals a detailed picture of potential rental income versus property value. To begin with, the Fair Market Rent (FMR) for a two-bedroom apartment in the area is set at $1,050 annually, as per the fiscal year 2026 metro guidelines. This translates into a monthly payment of approximately $87.50. Given the median home value of $245,536 in the region, the implied gross yield for a Section 8 rental would be around 4.25%. The calculation is derived from the annualized FMR of $1,050 divided by the median home value.
In contrast, the market rent for a similar two-bedroom unit stands at $1,056 annually, according to the Census ACS data. This figure suggests a slightly higher monthly rent of about $88, leading to an implied gross yield of roughly 4.3% when compared to the median home value. Both yields are calculated by dividing the annual rent by the median home value, offering a straightforward comparison between the government-subsidized rental rate and the market-driven rate.
Evaluating these scenarios, the market rent of $1,056 appears more realistic given the context of ZIP 55007. Despite the slight difference in gross yield, the market rent aligns closely with the actual demand and supply dynamics in the area. With only 6.8% of residents being renters, the competition for rental units is likely lower, making it feasible for landlords to charge closer to the market rate. Additionally, the absence of data regarding days on market (DOM) suggests that rental listings might move quickly once they are available, further supporting the use of market rates over the subsidized rates.
While the Section 8 program ensures a steady stream of income through government subsidies, the gross yield based on the market rent provides a clearer indication of the true profitability of rental properties in ZIP 55007. Investors should consider these factors carefully when deciding whether to participate in the Section 8 program or aim for market rents. The choice ultimately depends on their investment goals and tolerance for risk.
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.