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 | $1,370 |
| 1 Bedroom | $1,550 |
| 2 Bedrooms | $1,880 |
| 3 Bedrooms | $2,450 |
| 4 Bedrooms | $2,750 |
| 5 Bedrooms | $3,190 |
| 6 Bedrooms | $3,573 |
| 7 Bedrooms | $3,859 |
| 8 Bedrooms | $4,052 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,880 | $332,667 | 0.57% | F |
| 3BR | $2,450 | $396,148 | 0.62% | D |
| 4BR | $2,750 | $455,776 | 0.6% | D |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 55043, specifically Lakeland, MN, revolves around the disparity between the Fair Market Rent (FMR) set at $1710 for fiscal year 2024 and the actual market rent reported at $1,617 according to the Census ACS data. This creates a gap of $93, which represents approximately 5.76% of the FMR. The higher FMR compared to the market rent makes it an attractive proposition for landlords and small-portfolio investors looking to leverage housing vouchers.
Voucher tenants can be considered a yield play due to several factors. Firstly, the guaranteed payment from the government ensures a steady and reliable income stream, mitigating risks associated with tenant defaults. Secondly, the FMR in Lakeland, MN, being above the market rate, provides landlords with the opportunity to earn slightly more per unit than they would from open-market tenants. This scenario is particularly favorable given that only 8.9% of residents are renters, indicating a smaller pool of potential tenants and thus a competitive advantage for those participating in the voucher program.
The median home value in Lakeland, MN, stands at $396,169, while the median household income is $102,966. These figures suggest that homeownership is more prevalent and affordable relative to income levels. However, for those who do rent, the voucher system offers a pathway to secure housing at rates that are slightly above what the market dictates. This slight premium on rent can be seen as compensation for landlords, offsetting any perceived disadvantages of renting to voucher tenants.
In conclusion, the gap between the FMR and the market rent in ZIP 55043 presents a compelling case for landlords and small-portfolio investors to consider the benefits of renting to voucher tenants. The higher FMR not only guarantees a stable income but also provides a modest increase in rental yields, making it a strategic move in a market where rental demand is relatively low.
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.