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 | $1,320 |
| 1 Bedroom | $1,490 |
| 2 Bedrooms | $1,810 |
| 3 Bedrooms | $2,370 |
| 4 Bedrooms | $2,660 |
| 5 Bedrooms | $3,086 |
| 6 Bedrooms | $3,456 |
| 7 Bedrooms | $3,732 |
| 8 Bedrooms | $3,919 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,810 | $537,202 | 0.34% | F |
| 3BR | $2,370 | $564,487 | 0.42% | F |
| 4BR | $2,660 | $678,742 | 0.39% | F |
| 5BR | $3,086 | $805,841 | 0.38% | F |
U.S. Census Bureau data (2024)
ZIP 55042, located in Lake Elmo, MN, within the Minneapolis-St. Paul-Bloomington, MN-WI HUD Metro FMR Area, serves best as an appreciation play in a Section 8 portfolio strategy. The area's low price-cut share of 0.2% and non-applicable day DOM indicate that properties here are likely to appreciate in value rather than require frequent price adjustments or extended periods on the market.
The spread between the Fair Market Rent (FMR) of $1670 for FY 2024 and the current market rent of $2,407 shows that tenants in this area can afford higher rents, which is beneficial for landlords. However, the primary reason to categorize ZIP 55042 as an appreciation play is the robust economic environment characterized by a median income of $154,341. This high median income suggests strong demand for housing and potential for property value growth over time.
Furthermore, the median home value of $615,673 indicates that this is a relatively affluent area where property values are likely to increase. For landlords and small-portfolio investors, focusing on appreciation plays means holding onto properties for the long-term to benefit from rising property values, rather than seeking immediate rental income optimization.
In summary, ZIP 55042 is ideal for an appreciation play within a Section 8 portfolio due to its low price-cut share, robust economic indicators, and high median home value, all pointing towards a stable and potentially lucrative investment opportunity.
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.