Location: Minneapolis-St. Paul-Bloomington, MN | Metro: Minneapolis-St. Paul-Bloomington, MN-WI HUD Metro FMR Area
| 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 |
U.S. Census Bureau data (2024)
To determine if a landlord should buy in ZIP code 55328 (Delano, MN) for Section 8 purposes, follow this decision tree based on the provided data.
Step 1: Does the Fair Market Rent (FMR) of $1270 for fiscal year 2024 cover the debt service on a property valued at $436,032?
Yes: The FMR of $1270 is sufficient to cover the debt service on a property costing $436,032. This means that the rental income will be adequate to meet monthly mortgage payments and other expenses associated with owning the property. Proceed to Step 2.
No: The FMR of $1270 does not cover the debt service on a property priced at $436,032. This indicates that the rental income would not be enough to sustain the financial obligations of the property. Do not invest in this area for Section 8 purposes.
Step 2: Is the market rent of $973 (from Census ACS) above, at, or below the FMR?
Above FMR: If the market rent were above $1270, it would suggest that the landlord could potentially earn more from private tenants than from Section 8. However, given the data, the market rent is below the FMR, indicating that Section 8 might offer higher guaranteed income compared to the local market. Proceed to Step 3.
At or Below FMR: Since the market rent of $973 is below the FMR, Section 8 can provide a stable source of income that is higher than the average market rate. This makes Section 8 properties more attractive in Delano, MN. Proceed to Step 3.
Step 3: Are there enough renters and days on the market (DOM) to support demand for Section 8 units?
Yes: With 17.3% of residents being renters, there is a notable rental population in Delano, MN. Although the data does not specify the DOM, the presence of a significant number of renters suggests that there is enough demand to support Section 8 units. Given the higher FMR compared to market rent, investing in Section 8 properties in this area is advisable.
No: If the percentage of renters were lower, or if the DOM indicated that properties take a long time to rent out, this would suggest low demand for rental units. However, since the percentage of renters is 17.3%, and DOM is listed as N/A, which implies it's not a critical factor, the demand appears to be sufficient for Section 8 units. Therefore, proceed with investment.
It Depends: In cases where the DOM is high, it might indicate a slower rental market. However, with 17.3% of residents being renters, the demand is present but may need to be evaluated further for specific trends in DOM. Assuming DOM is not an issue, the investment in Section 8 properties is still favorable due to the higher FMR compared to the market rent.
In conclusion, the FMR of $1270 is sufficient to cover debt service on a $436,032 property and is higher than the market rent of $973. With 17.3% of residents being renters, there is enough demand to support Section 8 investments. Therefore, landlords should consider buying in ZIP code 55328 for Section 8 purposes.
Data Sources: FMR data from HUD (2027). 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.