Location: Duluth, MN | Metro: Duluth, MN-WI MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $970 |
| 1 Bedroom | $1,110 |
| 2 Bedrooms | $1,390 |
| 3 Bedrooms | $1,920 |
| 4 Bedrooms | $2,320 |
| 5 Bedrooms | $2,691 |
| 6 Bedrooms | $3,014 |
| 7 Bedrooms | $3,255 |
| 8 Bedrooms | $3,418 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 55797 reveals a detailed picture of the potential returns for landlords and small-portfolio investors considering Section 8 properties. The Fair Market Rent (FMR) for a 2-bedroom apartment in this area, as set for FY 2024, is $1270 per month. When annualized, this equates to $15,240 in rental income. In contrast, the market rent for a similar property, according to the Census ACS, stands at $1,284 per month, which translates to $15,408 annually.
To determine the gross yield, we divide these annual figures by the median home value of $326,431. For the Section 8 scenario, the gross yield is calculated as follows:
$15,240 / $326,431 = 0.0467 or 4.67%
For the market rent scenario, the calculation is:
$15,408 / $326,431 = 0.0472 or 4.72%
The difference between the two gross yields is minimal, with the market rent scenario offering a slightly higher return. However, the choice between these options should also consider the renter density and the days on market (DOM) data. With a renter density of only 5.9%, it suggests that the demand for rentals in ZIP 55797 is relatively low, making it harder to find tenants willing to pay market rates consistently. The N/A for DOM indicates incomplete data, which could mean either very quick or very slow sales, adding uncertainty to the investment decision.
Given the low renter density, the Section 8 option becomes more attractive due to its guaranteed income stream and lower vacancy risk. While the gross yield is slightly lower, the stability provided by the government-subsidized program can be a significant advantage over relying solely on market fluctuations. For landlords and small-portfolio investors looking for a steady income source in ZIP 55797, the Section 8 option offers a reliable 4.67% gross yield compared to the market's 4.72%, with the added benefit of reduced financial volatility.
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.