Location: Minneapolis-St. Paul-Bloomington, 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 | $1,160 |
| 1 Bedroom | $1,310 |
| 2 Bedrooms | $1,590 |
| 3 Bedrooms | $2,080 |
| 4 Bedrooms | $2,330 |
| 5 Bedrooms | $2,703 |
| 6 Bedrooms | $3,027 |
| 7 Bedrooms | $3,269 |
| 8 Bedrooms | $3,432 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,310 | $255,371 | 0.51% | F |
| 2BR | $1,590 | $277,665 | 0.57% | F |
| 3BR | $2,080 | $341,618 | 0.61% | D |
| 4BR | $2,330 | $363,912 | 0.64% | D |
| 5BR | $2,703 | $408,264 | 0.66% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 55008 in Cambridge, MN, reveals distinct scenarios based on the Fair Market Rent (FMR) and market rent figures. For a two-bedroom unit, the annualized FMR for FY 2024 stands at $1440, while the market rent according to Census ACS data is $1,325.
To calculate the implied gross yield, we use the median home value of $324,975. The FMR scenario suggests an annual rental income of $1440 for a two-bedroom unit. Dividing this figure by the median home value yields an implied gross yield of approximately 0.44%. On the other hand, using the market rent of $1,325 results in an implied gross yield of about 0.41%.
Given the 24.3% renter density in the area, it's important to consider the practical implications of these figures. The FMR scenario, though higher, is less likely to be realized due to the strict income eligibility requirements of the Section 8 program. This means that landlords might struggle to find tenants who qualify for the higher FMR rates, especially in a market where the majority of residents (75.7%) own their homes.
The N/A-day Days on Market (DOM) indicates that there isn't sufficient data to determine how quickly properties are rented out, which adds another layer of uncertainty to the analysis. However, considering the higher ownership rate and the difficulty in qualifying for Section 8, the market rent of $1,325 is more likely to be achieved consistently.
In conclusion, while the FMR provides a slightly better gross yield of 0.44%, the market rent scenario of 0.41% is more realistic for landlords and small-portfolio investors in ZIP 55008. This is due to the challenging tenant qualification process for Section 8 and the relatively low renter population density in the area.
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.