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 | $800 |
| 1 Bedroom | $920 |
| 2 Bedrooms | $1,150 |
| 3 Bedrooms | $1,590 |
| 4 Bedrooms | $1,920 |
| 5 Bedrooms | $2,227 |
| 6 Bedrooms | $2,494 |
| 7 Bedrooms | $2,694 |
| 8 Bedrooms | $2,829 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,150 | $181,485 | 0.63% | D |
| 3BR | $1,590 | $245,580 | 0.65% | D |
| 4BR | $1,920 | $315,504 | 0.61% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 55768, Mountain Iron, MN, reveals a critical distinction between federally mandated Fair Market Rents (FMRs) and actual market conditions. For a two-bedroom unit, the annualized FMR set by the federal government for fiscal year 2024 is $980 per month. This translates into an annual income of $11,760. Using the median home value of $201,696, the implied gross yield based on FMR is approximately 5.8%. However, the Census ACS data indicates that the market rent for a similar unit is $954 per month, leading to an annual income of $11,448. This results in a gross yield of about 5.7%.
Given the renter density of 25.0% and the lack of available days on the market (DOM) data, it's important to consider which scenario is more realistic. The slight difference between the FMR and market rent suggests that the federally mandated rates are only marginally higher than what landlords can realistically expect to charge. This indicates that landlords participating in the Section 8 program might face minimal rental income variance compared to market rates.
However, the N/A-day DOM suggests that there is limited data on how quickly homes are rented out in this area. This could imply that the housing market in Mountain Iron is relatively stable, with few listings and consistent demand, particularly among renters. Given the 25.0% renter density, it's clear that a significant portion of the population relies on rental properties, making the market somewhat resilient to fluctuations.
In conclusion, while the gross yields derived from both the FMR and market rent are nearly identical at 5.8% and 5.7% respectively, the market rent scenario is likely more reflective of reality. Landlords should be prepared to adjust their expectations slightly downward when considering the Section 8 program, understanding that the difference in gross yield is marginal but still relevant in investment decision-making.
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.