Location: Steele County, MN | Metro: Rice 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 | $940 |
| 1 Bedroom | $950 |
| 2 Bedrooms | $1,240 |
| 3 Bedrooms | $1,640 |
| 4 Bedrooms | $2,070 |
| 5 Bedrooms | $2,401 |
| 6 Bedrooms | $2,689 |
| 7 Bedrooms | $2,904 |
| 8 Bedrooms | $3,049 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $950 | $321,641 | 0.3% | F |
| 2BR | $1,240 | $273,537 | 0.45% | F |
| 3BR | $1,640 | $303,969 | 0.54% | F |
| 4BR | $2,070 | $369,796 | 0.56% | F |
| 5BR | $2,401 | $423,469 | 0.57% | F |
U.S. Census Bureau data (2024)
The rent math in ZIP code 55021, located in Faribault, MN within the Steele County metro area, does not work favorably for landlords. The Fair Market Rent (FMR) set at $1,210 for the fiscal year 2026 is significantly lower than the current market rent, which stands at $1,521 (ZORI). This gap indicates that landlords participating in the Section 8 program would receive less than the market rate for their properties.
Acquisition in this area is moderately affordable. With a median home value of $296,079, purchasing a property is within reach for many investors. However, the 46-day Days on Market (DOM) suggests that homes are selling relatively quickly, which could indicate a competitive market. The low 0.1% price-cut share further supports the idea that sellers are not having to reduce their asking prices, indicating a strong seller's market where homes are likely to sell close to their listed values.
Tenant demand is present but not overwhelming. The ZIP code has a total population of 30,908, with 28.2% being renters. This means approximately 8,722 residents are looking for rental housing, providing a reasonable pool of potential tenants for landlords. However, the relatively small size of the renter pool compared to the overall population might limit the number of available Section 8 participants.
Verdict: While there is a steady demand for rentals in ZIP 55021, the disparity between the FMR and market rent makes participation in the Section 8 program less attractive for landlords. Despite the moderately affordable acquisition costs and quick sales, the financial benefits for landlords are diminished due to the lower reimbursement rates under Section 8. Investors should carefully weigh these factors against their investment goals before entering this market.
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.