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 | $1,120 |
| 1 Bedroom | $1,270 |
| 2 Bedrooms | $1,540 |
| 3 Bedrooms | $2,040 |
| 4 Bedrooms | $2,280 |
| 5 Bedrooms | $2,645 |
| 6 Bedrooms | $2,962 |
| 7 Bedrooms | $3,199 |
| 8 Bedrooms | $3,359 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,540 | $487,140 | 0.32% | F |
| 3BR | $2,040 | $522,095 | 0.39% | F |
| 4BR | $2,280 | $590,439 | 0.39% | F |
| 5BR | $2,645 | $670,794 | 0.39% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 55073, Scandia, MN, reveals some critical insights into potential investment opportunities. To start, the Fair Market Rent (FMR) for a two-bedroom apartment in FY 2024 is set at $1270 per month. This translates to an annualized income of $15,240. In contrast, the market rent based on Census ACS data stands at $991 per month, equating to an annualized income of $11,892.
Using the median home value of $533,967 as a baseline, we can calculate the implied gross yield for both scenarios. For the Section 8 FMR scenario, the gross yield is approximately 2.85%, while for the market rent scenario, it drops to about 2.23%. This calculation provides a clear indication that Section 8 properties in Scandia, MN, could offer a higher gross yield compared to non-subsidized rentals.
However, the reality of these yields must be tempered by the local rental market conditions. With a renter density of only 11.0%, it's evident that the demand for rental properties, including those under the Section 8 program, is relatively low. The N/A-day DOM (Days on Market) suggests either a very competitive market where homes are rented quickly, or perhaps a lack of available rental listings to accurately gauge market dynamics.
In conclusion, while the Section 8 FMR scenario offers a higher gross yield of 2.85% compared to the market rent scenario's 2.23%, the actual performance will depend heavily on the local rental market's ability to sustain such rents. Given the low renter density, securing tenants might pose a challenge, making the market rent scenario more realistic despite its lower yield. Investors should consider these factors carefully when evaluating potential returns in Scandia, MN.
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.