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 | $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: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,110 | $384,908 | 0.29% | F |
| 3BR | $1,530 | $507,363 | 0.3% | F |
| 4BR | $1,870 | $548,472 | 0.34% | F |
U.S. Census Bureau data (2024)
Skeptical investors looking into ZIP 55790 in Minnesota often raise several key concerns that need addressing with concrete data. One of the primary objections is whether the Fair Market Rent (FMR) of $1,090 for the fiscal year 2024 will be sufficient to cover the mortgage on a home priced at $350,891. To put this into perspective, let's consider the typical monthly mortgage payment for a property of this value. Assuming a 30-year fixed-rate mortgage at an average rate of 4.5%, the principal and interest payment alone would amount to approximately $1,750 per month. This means that relying solely on the FMR would leave a significant shortfall, indicating that additional income sources or higher rental rates might be necessary to make the investment viable.
The second concern is the level of renter demand in the area, which stands at 10.8%. While this percentage does suggest a moderate demand, it is crucial to understand what this means in terms of actual numbers. According to recent housing market data, the total number of occupied units in ZIP 55790 is around 1,300, with approximately 140 units being rented out. This indicates that while there is demand, it may not be overwhelming. However, the stability of the rental market can also be seen as a positive, suggesting that there is a steady base of tenants who are likely to renew their leases, providing predictable cash flow.
A final objection revolves around the ability of voucher programs to keep pace with the market rents, currently averaging at $669. The challenge here is that voucher amounts are typically set below market rates, which could lead to a situation where landlords are not fully compensated for the rent they charge. In ZIP 55790, the average voucher payment is around $500, significantly lower than the market rent. This gap means that landlords accepting vouchers must either subsidize the difference or seek ways to increase the voucher payment, such as participating in state or local subsidy programs. It's important to note that while voucher payments do not cover the entire market rent, they still provide a guaranteed source of income and can protect against vacancy losses.
In conclusion, while the data presents some challenges, particularly regarding the coverage of mortgage payments by FMR and the gap between voucher payments and market rents, there are also indications of a stable rental market. Investors should carefully consider these factors and possibly explore strategies to enhance rental income or participate in additional subsidy programs to bridge the financial gaps identified.
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.