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 | $920 |
| 1 Bedroom | $1,050 |
| 2 Bedrooms | $1,320 |
| 3 Bedrooms | $1,830 |
| 4 Bedrooms | $2,210 |
| 5 Bedrooms | $2,564 |
| 6 Bedrooms | $2,872 |
| 7 Bedrooms | $3,102 |
| 8 Bedrooms | $3,257 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,050 | $193,900 | 0.54% | F |
| 2BR | $1,320 | $240,588 | 0.55% | F |
| 3BR | $1,830 | $326,096 | 0.56% | F |
| 4BR | $2,210 | $429,466 | 0.51% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 55810 in Minnesota reveals some interesting insights. To start, let's consider the Federal Market Rent (FMR) for a 2-bedroom unit, which is set at $1060 per month for fiscal year 2024. This translates to an annual rental income of $12,720. Given the median home value in the area is $289,910, we can calculate the implied gross yield for a property rented under Section 8 guidelines. The gross yield would be approximately 4.4%, calculated by dividing the annual rental income ($12,720) by the median home value ($289,910).
Next, let's look at the market rent for a 2-bedroom unit, which stands at $1,106 per month according to the Census ACS data. This amounts to an annual rental income of $13,272. Using the same median home value of $289,910, the implied gross yield based on market rent would be about 4.6%. This calculation provides a slightly higher gross yield compared to the Section 8 scenario.
The gross yield comparison between the two scenarios shows that renting at market rates offers a marginally better return. However, the reality of the situation must also take into account the 11.1% renter density in the area. This relatively low percentage suggests that there might be fewer potential renters, making it challenging to consistently achieve market rents. Additionally, the N/A-day DOM (days on market) indicates incomplete data, which could mean either very quick sales or long periods without transactions, adding uncertainty to the analysis.
In conclusion, while the market rent scenario offers a higher gross yield of 4.6% versus the 4.4% from Section 8 rents, the lower renter density and incomplete DOM data suggest that the Section 8 gross yield is more realistic for most properties in ZIP 55810. Landlords and small-portfolio investors should carefully consider these factors when evaluating the potential returns from properties in this area.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.