Location: Cook County, MN | Metro: Cook County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $840 |
| 1 Bedroom | $1,110 |
| 2 Bedrooms | $1,210 |
| 3 Bedrooms | $1,680 |
| 4 Bedrooms | $1,770 |
| 5 Bedrooms | $2,053 |
| 6 Bedrooms | $2,299 |
| 7 Bedrooms | $2,483 |
| 8 Bedrooms | $2,607 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 55612 reveals key insights into potential investment returns. Using the Federal Market Rent (FMR) for a 2-bedroom apartment at $1,180 per month for FY 2026, the annualized rental income would be $14,160. Against the median home value of $495,275, this translates to an implied gross yield of approximately 2.86%. This calculation is based purely on the FMR and does not account for any other factors that might influence actual yields.
In contrast, using the market rent figure of $1,010 per month derived from the Census ACS, the annualized rental income would be $12,120. This results in an implied gross yield of about 2.45% when compared to the median home value. The difference between these two yields highlights the impact of subsidized versus market rents on investment performance.
The 8.3% renter density in ZIP 55612 suggests a relatively low proportion of residents who might be eligible for Section 8 housing. Given this density, it's important to consider the likelihood of finding tenants who qualify for the program. Additionally, the N/A-day Days on Market (DOM) indicates that there isn't sufficient data to determine how quickly properties might be leased under Section 8 conditions, adding another layer of uncertainty to the investment decision.
While the higher FMR of $1,180 per month presents a more attractive gross yield of 2.86%, the reality of finding qualified tenants and the potential for slower lease-up times due to limited demand should temper expectations. The market rent of $1,010 per month, leading to a gross yield of 2.45%, may be more reflective of what landlords and small-portfolio investors can realistically achieve in this area.
To conclude, the gross yield from Section 8 rentals in ZIP 55612 is significantly lower than typical market yields, but it provides a stable source of income. Investors should weigh the benefits of guaranteed rental income against the lower gross yields and potential challenges in tenant acquisition before making investment decisions.
Data Sources: FMR data from HUD (2027). 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.