Location: St. Cloud, 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 | $330,836 | 0.47% | F |
| 3BR | $2,040 | $396,448 | 0.51% | F |
| 4BR | $2,280 | $434,056 | 0.53% | F |
| 5BR | $2,645 | $496,864 | 0.53% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 55371 in Princeton, MN, reveals a nuanced picture when comparing the Federal Market Rent (FMR) and the actual market rent. Using the annualized 2BR FMR of $1270 for FY 2024, the potential annual rental income would be $15,240. Given the median home value of $365,682, this translates into an implied gross yield of approximately 4.17%. The calculation is straightforward: divide the annual rental income by the property value.
On the other hand, using the Zillow Observed Rent Index (ZORI) of $1,273 for a 2BR unit, the annual rental income becomes $15,276. This results in an implied gross yield of about 4.18%, based on the same median home value. Thus, the difference between the two yields is minimal, at just 0.01%.
To determine which scenario is more realistic, consider the local rental market conditions. With a renter density of 15.1%, it indicates that a significant portion of the housing stock is owner-occupied, potentially making Section 8 units less attractive to landlords who might prefer higher-paying tenants. Additionally, the days-on-market (DOM) figure of 44 days suggests a relatively quick turnover rate, which could be indicative of a competitive rental market where landlords might opt for market rents over Section 8 rates.
Given these factors, the ZORI-based gross yield of 4.18% appears slightly more realistic for ZIP 55371. However, investors should also factor in the administrative overhead and the potential benefits of long-term lease stability offered by Section 8, which can offset the lower gross yield. Ultimately, the decision hinges on individual investor preferences and the specific dynamics of the local housing market.
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.