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 | $1,200 |
| 1 Bedroom | $1,360 |
| 2 Bedrooms | $1,650 |
| 3 Bedrooms | $2,150 |
| 4 Bedrooms | $2,410 |
| 5 Bedrooms | $2,796 |
| 6 Bedrooms | $3,132 |
| 7 Bedrooms | $3,383 |
| 8 Bedrooms | $3,552 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,650 | $257,480 | 0.64% | D |
| 3BR | $2,150 | $344,772 | 0.62% | D |
| 4BR | $2,410 | $420,241 | 0.57% | F |
| 5BR | $2,796 | $506,963 | 0.55% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis for ZIP code 55076, located in Inver Grove Heights, MN, is based on the disparity between the Fair Market Rent (FMR) set at $1700 for fiscal year 2024 and the actual market rent reported at $1,374 according to the Census ACS. This gap amounts to $326 per month, or approximately 23.7%, which presents a unique opportunity for landlords and small-portfolio investors.
Given that the FMR exceeds the market rent, properties in ZIP 55076 can be attractive for voucher tenants, making this area a strong yield play. The higher FMR means that landlords can potentially charge closer to the $1700 figure for Section 8 units without losing tenants, thereby increasing their rental income above what they might earn in the open market. This scenario benefits investors who are willing to participate in the Section 8 program, as they can capitalize on the government's willingness to pay a higher rate than the current market demands.
Inver Grove Heights has a relatively low percentage of renters at 14.0%, suggesting that homeownership is more prevalent in the area, with a median home value of $327,014. The median income in the area stands at $93,847, indicating a middle-class community where rental properties can serve as a valuable asset for those seeking affordable housing options.
The cost of housing voucher tenants below open-market rates is minimal in this context. Landlords can expect steady and timely payments from the government, which can be more reliable than collecting rent from non-voucher tenants. Additionally, the higher FMR allows landlords to cover maintenance costs and still generate a profit margin that is superior to typical market rents.
To summarize, the $326 monthly difference between the FMR and market rent in ZIP 55076 makes it an advantageous location for landlords and investors looking to maximize yields through the Section 8 program. The local context of Inver Grove Heights, with its median income and home values, supports the viability of this strategy for providing affordable housing while ensuring financial stability for property owners.
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.