Location: Freeborn County, MN | Metro: Faribault County, MN
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 | $910 |
| 1 Bedroom | $990 |
| 2 Bedrooms | $1,300 |
| 3 Bedrooms | $1,710 |
| 4 Bedrooms | $1,960 |
| 5 Bedrooms | $2,274 |
| 6 Bedrooms | $2,547 |
| 7 Bedrooms | $2,751 |
| 8 Bedrooms | $2,889 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,300 | $179,778 | 0.72% | D |
| 3BR | $1,710 | $233,158 | 0.73% | D |
| 4BR | $1,960 | $312,490 | 0.63% | D |
U.S. Census Bureau data (2024)
The ZIP code 56009 represents a small, residential neighborhood in Mankato, MN, with a total population of 1,527. Only 14.2% of the residents are renters, indicating a primarily owner-occupied community. The median household income stands at $80,804, which is relatively high, suggesting a middle-class area. The median home value is $234,017, reflecting the modest yet stable housing market in the region.
When it comes to rental economics, the Fair Market Rent (FMR) set by HUD for the metro area for fiscal year 2026 is $1,190. However, the actual market rent, according to Census ACS data, is significantly lower at $920 per month. This disparity between the FMR and the market rent presents an opportunity for Section 8 investors, as the voucher program can help bridge the gap and make properties more attractive to potential tenants.
Given these conditions, ZIP 56009 is well-suited for both hands-off voucher operators and hands-on value-add buyers. For hands-off operators, the lower market rent compared to the FMR means that properties can be rented out at rates that are fully covered by vouchers without the need for extensive property management. On the other hand, for hands-on investors looking to add value, there is room to increase rents closer to the FMR by improving property quality, which can lead to higher returns over time.
In conclusion, the neighborhood in ZIP 56009 offers a mix of affordability and stability, making it an attractive investment for Section 8 participants. With a median income of $80,804 and median home values at $234,017, the area supports a solid tenant base. The discrepancy between the FMR of $1,190 and the current market rent of $920 provides a clear advantage for leveraging the voucher system to either maintain steady cash flows or pursue value-add strategies.
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.