Location: Faribault County, MN | Metro: Mankato, MN 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 | $880 |
| 1 Bedroom | $880 |
| 2 Bedrooms | $1,060 |
| 3 Bedrooms | $1,470 |
| 4 Bedrooms | $1,730 |
| 5 Bedrooms | $2,007 |
| 6 Bedrooms | $2,248 |
| 7 Bedrooms | $2,428 |
| 8 Bedrooms | $2,549 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,060 | $222,682 | 0.48% | F |
| 3BR | $1,470 | $236,722 | 0.62% | D |
| 4BR | $1,730 | $263,917 | 0.66% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 56010 (Amboy, MN) reveals a challenging investment environment. Using the Fair Market Rent (FMR) for a 2BR unit at $960 per month as of FY 2024, the annualized income would be $11,520. This figure, when compared to the median home value of $231,267, implies a gross yield of approximately 4.98%. The calculation is straightforward: divide the annual rental income by the property value.
However, the market rent for a similar unit stands at $750 per month, according to the Census ACS. Annualizing this rate gives us an income of $9,000 per year. With this lower rental income, the gross yield drops significantly to about 3.89%. The disparity between these two yields highlights the importance of understanding local rental dynamics and the specific terms offered by the Section 8 program.
Given the 12.1% renter density in Amboy, MN, it is reasonable to consider the market rent scenario as more reflective of the actual rental environment. The lack of data on days on market (DOM) indicates either a stable rental market or limited turnover, which can affect the feasibility of renting properties through Section 8. A higher FMR does not necessarily translate into higher occupancy rates if the overall demand for rentals is low.
To conclude, while the Section 8 FMR provides a higher gross yield of 4.98%, the reality of the local rental market suggests that a gross yield closer to 3.89% based on market rents is more likely. Landlords and small-portfolio investors should carefully weigh these figures against their investment goals and local market conditions before deciding to participate in the Section 8 program.
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.