Location: Duluth, 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 | $860 |
| 1 Bedroom | $980 |
| 2 Bedrooms | $1,230 |
| 3 Bedrooms | $1,700 |
| 4 Bedrooms | $2,060 |
| 5 Bedrooms | $2,390 |
| 6 Bedrooms | $2,677 |
| 7 Bedrooms | $2,891 |
| 8 Bedrooms | $3,036 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,230 | $128,020 | 0.96% | C |
| 3BR | $1,700 | $128,766 | 1.32% | A |
| 4BR | $2,060 | $142,313 | 1.45% | A |
U.S. Census Bureau data (2024)
To determine if you should buy in ZIP code 55750 (Hoyt Lakes, MN) for Section 8 investments, follow these steps:
Step 1: Does the Fair Market Rent ($980) cover the debt service on a $117,525 property?
Yes. If the monthly debt service on your property is less than $980, then the Fair Market Rent (FMR) can cover your expenses. For instance, a mortgage payment of $500 would be fully covered, leaving room for other costs such as maintenance and insurance.
No. If the monthly debt service exceeds $980, then FMR will not be sufficient. For example, a mortgage payment of $600 combined with property taxes and insurance could easily exceed $980, making it unprofitable without additional subsidies or income sources.
It depends. If the debt service is close to $980, say around $850, then you need to consider other factors such as the cost of utilities and whether you can charge the tenant for these expenses. If utilities are included and cost $100 per month, then the total debt service would be $950, which is still manageable under the FMR cap.
Step 2: Is the market rent ($1,550) above, at, or below the FMR?
Above. The market rent is significantly higher than the FMR, indicating that Section 8 tenants would pay much less than what the market demands. This can be seen as a disadvantage since you might lose out on potential rental income.
At or Below. If market conditions change and market rent falls closer to or below $980, then Section 8 becomes a more viable option. However, based on current data, this scenario is unlikely.
Step 3: Are 4.3% renters and N/A-day days on market enough demand?
Yes. If the percentage of renters is stable and there is a high demand for affordable housing in Hoyt Lakes, then the 4.3% of renters could be sufficient. However, the lack of data on days on market (DOM) makes it difficult to assess the speed at which properties are rented out.
No. If the percentage of renters is declining or if there is an oversupply of rental units, then 4.3% may not be enough to ensure steady occupancy. Additionally, if the DOM is long, it suggests low demand, making it harder to find tenants quickly.
It depends. With limited data on DOM, you must consider other local factors such as employment rates, population growth, and the availability of alternative housing options. If Hoyt Lakes has a growing economy and a shortage of affordable units, then the 4.3% of renters could still provide enough demand.
In conclusion, Hoyt Lakes, MN (ZIP 55750) presents a challenging environment for Section 8 investments due to the significant gap between FMR and market rents. The decision ultimately hinges on your ability to manage lower rents and the specific local dynamics affecting demand. If you can control costs and find a niche, it could work; otherwise, consider areas where FMR more closely aligns with market rents.
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.