Location: Itasca County, MN | Metro: Duluth, MN-WI MSA
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 | $770 |
| 1 Bedroom | $890 |
| 2 Bedrooms | $1,110 |
| 3 Bedrooms | $1,530 |
| 4 Bedrooms | $1,870 |
| 5 Bedrooms | $2,169 |
| 6 Bedrooms | $2,429 |
| 7 Bedrooms | $2,623 |
| 8 Bedrooms | $2,754 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,110 | $270,558 | 0.41% | F |
| 3BR | $1,530 | $310,380 | 0.49% | F |
U.S. Census Bureau data (2024)
A skeptical investor looking into the real estate market in ZIP code 55723, Angora, MN, might have several concerns regarding the feasibility of investing in this area. Let's address these concerns one by one using available data.
Objection 1: Will FMR $980 (zip FY 2024) cover the mortgage on a $238,933 home?
The Fair Market Rent (FMR) for a one-bedroom unit in ZIP 55723 for fiscal year 2024 is set at $980. This figure represents the maximum amount that a tenant participating in the Section 8 program can pay for rent. To determine if this will cover the mortgage, we need to consider the typical mortgage payments for a home priced at $238,933. Assuming a 30-year fixed-rate mortgage with an interest rate of 5%, the monthly payment would be approximately $1,260. Clearly, the FMR of $980 is insufficient to cover the mortgage payment of $1,260, leaving a shortfall of $280 per month. This indicates that relying solely on Section 8 tenants may not be financially viable without additional rental income or subsidies.
Objection 2: Is there enough renter demand at 12.8%?
The percentage of renters in ZIP 55723 is 12.8%. This number suggests that a significant portion of the population owns their homes rather than renting. However, it's important to note that even a small percentage of the total population can represent a substantial number of potential tenants. The low renter demand could pose a challenge for finding tenants quickly, but it also means less competition among landlords. The key here is understanding the local housing dynamics and ensuring that the property is well-maintained and priced competitively within the Section 8 framework.
Objection 3: Will vouchers keep pace with $550 market rents?
The FMR of $980 is higher than the current market rent of $550, indicating that vouchers should indeed keep pace with market rents. This is positive for landlords as it ensures that they will receive the fair market value for their properties through the voucher system. However, the actual rent received may still be capped at the FMR level, which is currently above the market rent. This means that landlords are protected from market fluctuations and guaranteed a certain level of income, though they may not benefit from higher-than-average market rents.
In conclusion, while there are valid concerns about the financial viability of investing in ZIP 55723 based on the given data, the alignment between the FMR and current market rents provides a stable environment for landlords. The low percentage of renters suggests a need for careful consideration of the local market and possibly diversifying investment strategies. Despite the challenges, the Section 8 program offers a reliable source of income that matches the current market conditions.
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.