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 | $1,900 |
| 1 Bedroom | $2,140 |
| 2 Bedrooms | $2,600 |
| 3 Bedrooms | $3,390 |
| 4 Bedrooms | $3,810 |
| 5 Bedrooms | $4,420 |
| 6 Bedrooms | $4,950 |
| 7 Bedrooms | $5,346 |
| 8 Bedrooms | $5,613 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,600 | $394,581 | 0.66% | D |
| 3BR | $3,390 | $439,505 | 0.77% | D |
| 4BR | $3,810 | $650,462 | 0.59% | F |
| 5BR | $4,420 | $749,776 | 0.59% | F |
U.S. Census Bureau data (2024)
A skeptical investor looking at ZIP 55386, Victoria, MN, might have several concerns regarding the feasibility of investing in properties that participate in the Section 8 program. Let's address these concerns with the available data.
Will FMR $2210 (zip FY 2024) cover the mortgage on a $609,817 home?
The Fair Market Rent (FMR) for ZIP 55386 in fiscal year 2024 is set at $2210. This figure represents the maximum amount that a Section 8 tenant can pay towards their rent. To determine if this will cover the mortgage, we need to consider the typical interest rates and loan terms. Assuming a 30-year fixed-rate mortgage at an average rate of 5%, the monthly payment on a $609,817 home would be approximately $3230. At first glance, the FMR does not fully cover the mortgage payment. However, it's important to note that the total rental income also includes the portion paid by the landlord, which can significantly reduce the financial burden. Additionally, property values and mortgage rates fluctuate, so it's wise to monitor these factors closely.
Is there enough renter demand at 6.7%?
The 6.7% occupancy rate for Section 8 units in Victoria, MN, indicates a relatively low demand compared to other areas. This could pose a risk for landlords who might face periods of vacancy. However, the percentage alone does not provide a complete picture; it's crucial to look at the number of available units and the overall rental market. If the total number of Section 8 units is small, even a modest increase in demand could lead to full occupancy. Moreover, the broader rental market's health, such as the unemployment rate and economic stability, plays a significant role in sustaining tenant demand.
Will vouchers keep pace with $1,765 market rents?
The market rent of $1,765 is higher than the FMR of $2210, which suggests that vouchers might not cover the full market value. This discrepancy means that landlords must decide whether to accept a lower rent through the voucher program or seek non-voucher tenants willing to pay the market rate. While vouchers are designed to adjust annually based on housing costs, there's no guarantee they will fully match the market rent. Landlords should prepare for potential shortfalls and consider the benefits of long-term, stable tenancy against the risk of lower immediate returns.
In conclusion, while the data presents some challenges, it also highlights opportunities. Careful planning and understanding of local market dynamics can help mitigate risks and maximize returns for landlords and small-portfolio investors in ZIP 55386.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.