Section 8 Fair Market Rent (FMR) for ZIP 55124 - 2027

Investment Score for ZIP 55124

Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)

FY 2027 Fair Market Rent Rates

Unit Size	Monthly FMR
Studio	$1,490
1 Bedroom	$1,680
2 Bedrooms	$2,040
3 Bedrooms	$2,660
4 Bedrooms	$2,990
5 Bedrooms	$3,468
6 Bedrooms	$3,884
7 Bedrooms	$4,195
8 Bedrooms	$4,405

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$1,680	$136,631	1.23%	A
2BR	$2,040	$253,569	0.8%	C
3BR	$2,660	$361,123	0.74%	D
4BR	$2,990	$445,398	0.67%	D
5BR	$3,468	$536,570	0.65%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 55124 (Apple Valley, MN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 55124, as set by HUD for 2026, is $1960 for a two-bedroom unit. This amount represents 24.1% of the median household income in Apple Valley, which is $97,727. To understand how this compares to actual rents, we can look at Zillow's median price for a two-bedroom unit, which is $254,875. The price-to-FMR ratio for a two-bedroom unit is 10.8x, indicating that the median home value is significantly higher than the FMR. For voucher holders, this means that finding affordable housing within the FMR limits can be challenging. The actual rent for a two-bedroom unit would likely exceed the FMR, making it difficult for voucher recipients to find suitable housing without additional subsidies or cost-sharing arrangements. Additionally, the occupancy rate of 98.2% suggests that there is limited availability of rental units, further constraining options for voucher holders. #### Affordability & Renter Profile In Apple Valley, 26.5% of the population are renters, indicating a relatively small but significant rental market. Given the high median household income and the occupancy rate, it is clear that the rental market is quite tight. The median household income of $97,727 implies that most residents can afford higher rents, which supports the notion that the rental market is competitive and potentially overpriced relative to FMRs. The high price-to-FMR ratio of 10.8x also indicates that the market is not particularly affordable for low-income renters. This tight market condition could lead to increased competition among renters and potentially higher rents, especially for units that are within the FMR range. #### Investor Angle From an investor perspective, the ZIP code 55124 presents a mixed picture. The FMR for a two-bedroom unit is $1960, which is lower than the Zillow median price of $254,875. However, the high price-to-FMR ratio suggests that the actual rental rates might be much higher than the FMR. If an investor were to purchase a property and rent it out at the FMR, they would likely face challenges in covering costs and generating positive cash flow due to the high median home values and associated expenses such as property taxes and maintenance. Given these factors, the investment grade for this ZIP code would be moderate to low for Section 8-focused investors. The primary constraint is the difficulty in finding properties that can be rented out at or below the FMR while still being profitable. Investors would need to carefully consider their acquisition costs and operating expenses to ensure viability. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units like one-bedroom or studio apartments. The FMR for a one-bedroom unit is $1610, which is more manageable compared to the two-bedroom FMR. This strategy could help investors achieve better cash flow and remain within the FMR guidelines. 2. **Consider Cost-Saving Measures**: To improve profitability, investors should explore ways to reduce operating costs. This could include energy-efficient upgrades, bulk purchasing of supplies, and leveraging local tax incentives for affordable housing projects. By minimizing expenses, investors can increase their chances of maintaining positive cash flow even when renting at FMR levels. 3. **Engage with Local Housing Authorities**: Building relationships with local housing authorities can provide valuable insights into the demand for Section 8 vouchers and potential opportunities for subsidized housing projects. These partnerships can also help navigate the complexities of the program and identify strategies for maximizing returns within the regulatory framework. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 55124 is to **Skip**. The high price-to-FMR ratio and tight rental market make it challenging to find properties that can be rented out at FMR levels while still generating positive cash flow. Investors looking to enter this market should carefully evaluate their ability to manage costs and find niche opportunities, such as smaller units, that align better with FMR guidelines. However, given the overall market conditions, it is advisable to seek other ZIP codes with more favorable dynamics for Section 8 investments.

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.