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 | $1,240 |
| 1 Bedroom | $1,400 |
| 2 Bedrooms | $1,700 |
| 3 Bedrooms | $2,220 |
| 4 Bedrooms | $2,490 |
| 5 Bedrooms | $2,888 |
| 6 Bedrooms | $3,235 |
| 7 Bedrooms | $3,494 |
| 8 Bedrooms | $3,669 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,700 | $261,966 | 0.65% | D |
| 3BR | $2,220 | $324,859 | 0.68% | D |
| 4BR | $2,490 | $343,752 | 0.72% | D |
| 5BR | $2,888 | $385,418 | 0.75% | D |
U.S. Census Bureau data (2024)
ZIP 55363, located in Montrose, MN, within the Minneapolis-St. Paul-Bloomington, MN-WI HUD Metro FMR Area, presents itself as an ideal cash-flow anchor for a Section 8 portfolio strategy. The Federal Market Rent (FMR) for the area in fiscal year 2024 is set at $1380, which is slightly below the market rent of $1405. This small gap means that landlords can expect a steady stream of rental income without the volatility often seen in areas with larger discrepancies between FMR and market rents.
The median home value in ZIP 55363 is $318,335. Given the relatively low FMR compared to the market rent, landlords can secure properties at reasonable prices while still benefiting from higher-than-FMR rental incomes. This scenario allows for a positive cash flow when managing properties under the Section 8 program, ensuring that landlords can cover their mortgage payments, maintenance costs, and other expenses with minimal risk.
While the appreciation potential in ZIP 55363 is not highlighted by specific percentage increases or days on market (DOM), the focus should be on the stability it provides rather than speculative growth. This ZIP code does not have a high price-cut share, indicating that property values are consistent and unlikely to fluctuate dramatically over time. Such stability is crucial for a cash-flow anchor, where the goal is to generate reliable income rather than capital gains.
The renter share in this area is 20.1%, which suggests that there is a moderate demand for rental properties. Coupled with the median income of $101,989, landlords can expect tenants who are likely to be financially stable and able to meet their rental obligations consistently. This demographic supports the idea that ZIP 55363 is suitable for a cash-flow anchor, as it ensures a steady and predictable tenant population.
In summary, ZIP 55363 stands out as a strong cash-flow anchor for a Section 8 portfolio due to its slight market rent premium over the FMR, stable property values, and a financially capable tenant base. These factors contribute to a reliable and sustainable income source, making it a valuable addition to any investment strategy focused on long-term financial security.
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.