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 | $366,425 | 0.42% | F |
| 3BR | $2,040 | $421,772 | 0.48% | F |
| 4BR | $2,280 | $471,376 | 0.48% | F |
| 5BR | $2,645 | $537,373 | 0.49% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 55319 (Clear Lake, MN) reveals a stark contrast between the federal market rent (FMR) and the actual market rent. Using the annualized 2BR FMR of $1500 for FY 2024, the potential annual rental income would be $18,000. Given the median home value of $403,122, the implied gross yield from the FMR scenario is approximately 4.46%. This calculation is derived from dividing the annual rental income by the property value.
In contrast, the Census ACS reported market rent for a 2BR unit at $950, which annualizes to $11,400. With the same median home value of $403,122, the implied gross yield from the market rent scenario drops significantly to about 2.83%. The difference between these two yields highlights the disparity between federally subsidized rents and the local housing market.
Given the 4.3% renter density in Clear Lake, it is important to consider the likelihood of finding tenants willing to pay the higher FMR. However, the N/A-day DOM (days on market) suggests that there might be a lack of recent sales data, which could impact the accuracy of the median home value used in these calculations. Despite this, the lower market rent scenario seems more realistic for most investors due to the limited rental demand in the area.
Investors should note that the gross yields calculated here serve as a baseline for understanding the financial landscape of Clear Lake. While the FMR scenario offers a higher yield, the actual market conditions, particularly the low renter density, may challenge the feasibility of achieving such returns consistently. Therefore, the 2.83% gross yield based on market rent provides a more grounded expectation for rental income relative to property value in this ZIP code.
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.