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 | $1,120 |
| 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 | $294,634 | 0.52% | F |
| 3BR | $2,040 | $363,485 | 0.56% | F |
| 4BR | $2,280 | $413,808 | 0.55% | F |
| 5BR | $2,645 | $470,602 | 0.56% | F |
U.S. Census Bureau data (2024)
The Watertown, MN area (ZIP 55388) presents a compelling opportunity for Section 8 real-estate investors. The HUD Fair Market Rent (FMR) for the fiscal year 2024 is set at $1270. This figure stands notably above the local market rent, which according to the Census ACS, averages $953. The comparison indicates that voucher tenants can easily cover the typical market rent, thus providing a strong positive cash flow for landlords. In fact, even with the FMR at $1270, the cash flow potential is robust, suggesting that investors might achieve profitability even without premium units.
To further contextualize this market, consider the median home value in the area, which is $379,695. This translates to a rent-to-price ratio of approximately 0.33%, indicating that rental properties are undervalued relative to their purchase price. Such a low ratio suggests that buying into the rental market could be more advantageous than purchasing homes for personal use.
However, it's important to note that the data does not provide specifics on the median days on market (DOM) or the percentage of listings that require price cuts. These metrics would offer deeper insights into the local housing market's liquidity and competitiveness, which directly impact an investor’s ability to sell or buy properties. Despite this lack of detail, the existing data points towards a stable and potentially lucrative rental market.
The strongest angle for Section 8 investors in this area is the cash flow potential. Given the disparity between the HUD FMR and the actual market rent, landlords can expect consistent, positive cash flow from voucher tenants, making this an attractive investment option.
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.