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 | $1,200 |
| 1 Bedroom | $1,370 |
| 2 Bedrooms | $1,720 |
| 3 Bedrooms | $2,380 |
| 4 Bedrooms | $2,870 |
| 5 Bedrooms | $3,329 |
| 6 Bedrooms | $3,728 |
| 7 Bedrooms | $4,026 |
| 8 Bedrooms | $4,227 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,370 | $223,371 | 0.61% | D |
| 2BR | $1,720 | $306,912 | 0.56% | F |
| 3BR | $2,380 | $384,357 | 0.62% | D |
| 4BR | $2,870 | $465,700 | 0.62% | D |
| 5BR | $3,329 | $533,662 | 0.62% | D |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $1,510 for ZIP code 55803 (Rice Lake, MN) in fiscal year 2024 can sufficiently cover the mortgage on a home priced at $341,369. To evaluate this, consider the typical interest rates and amortization schedules for mortgages. At an average interest rate of around 4%, a mortgage on a $341,369 home could have monthly payments ranging from $1,500 to $1,700, depending on the term length. Thus, the FMR of $1,510 aligns closely with covering the mortgage payment, especially if the property has low maintenance costs and other expenses are minimal.
The investor may also be concerned about the level of renter demand in Rice Lake, given that only 16.5% of the population are renters. However, this percentage does not tell the whole story. A smaller rental market can still support a strong investment portfolio if the demand for rental properties is high relative to supply. The local economy and job market play crucial roles in sustaining rental demand. Without specific economic indicators for Rice Lake, it's challenging to definitively state whether this percentage is sufficient. However, if the area maintains a steady employment rate and attracts new residents, the demand should remain consistent.
A final objection could be whether the Housing Choice Voucher Program will keep up with the market rent of $2,079. The voucher program aims to cover approximately 30% of the market rent, but the actual amount varies based on the tenant's income and the local housing authority's policies. If we assume the voucher covers 30% of the market rent, it would contribute around $623.70 towards the $1,510 FMR. This leaves a significant gap, suggesting that landlords must either adjust their expectations or find ways to supplement the income, such as through additional amenities or services that attract non-voucher tenants willing to pay higher rents.
In summary, while the FMR of $1,510 can cover a mortgage on a $341,369 home, the relatively low rental market share of 16.5% requires careful consideration of local economic factors. Additionally, the Housing Choice Voucher Program may not fully offset the market rent of $2,079, necessitating a diversified approach to ensure financial stability. These points highlight the importance of thorough due diligence and understanding the local market dynamics before making an investment decision in Rice Lake, MN.
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.