Location: Sibley County, MN | Metro: McLeod County, MN
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 | $830 |
| 1 Bedroom | $880 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,250 |
| 4 Bedrooms | $1,560 |
| 5 Bedrooms | $1,810 |
| 6 Bedrooms | $2,027 |
| 7 Bedrooms | $2,189 |
| 8 Bedrooms | $2,298 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,250 | $229,919 | 0.54% | F |
U.S. Census Bureau data (2024)
The investment risk assessment for ZIP code 55385 highlights several potential issues that could affect the success of a Section 8 rental property. First, the tenant turnover rate could be higher due to the significant gap between the market rent of $746 and the Fair Market Rent (FMR) of $970 for fiscal year 2026 in the metropolitan area. This disparity suggests that tenants might prefer higher-rent properties, leading to increased churn.
Vacancy exposure is another concern. The Days on Market (DOM) data is currently unavailable, which makes it difficult to predict how long it might take to fill a vacancy. However, considering the high FMR compared to the market rent, there is a risk of prolonged vacancies if landlords rely solely on Section 8 tenants.
Deferred maintenance exposure is also notable. With a typical home value of $271,468 and a median income of $78,125, landlords must ensure that their properties meet the necessary standards for Section 8 eligibility without overextending themselves financially. The cost of repairs and maintenance can be substantial relative to the income level of residents, potentially straining the budget.
Despite these risks, the high renter share of 13.1% in ZIP 55385 indicates a robust demand for rental housing. This dense rental market often translates into a higher number of voucher holders seeking affordable housing options, which can stabilize occupancy rates and reduce vacancy periods.
Verdict: Moderate risk for a first-time Section 8 landlord.
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.