Location: Freeborn County, MN | Metro: Freeborn 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 | $730 |
| 1 Bedroom | $800 |
| 2 Bedrooms | $1,050 |
| 3 Bedrooms | $1,380 |
| 4 Bedrooms | $1,580 |
| 5 Bedrooms | $1,833 |
| 6 Bedrooms | $2,053 |
| 7 Bedrooms | $2,217 |
| 8 Bedrooms | $2,328 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,380 | $209,165 | 0.66% | D |
U.S. Census Bureau data (2024)
A landlord considering investing in ZIP code 56029 for Section 8 purposes must evaluate several key factors to make an informed decision. The first question to address is whether the Fair Market Rent (FMR) of $970 for the metro area in fiscal year 2026 can cover the debt service on a property valued at $179,873. To determine this, you must calculate the monthly debt service. Assuming a typical mortgage rate of around 4% and a 30-year term, the monthly payment would be approximately $870. Therefore, the FMR of $970 does clear the debt service, providing a positive answer to the first gating question.
The second question involves comparing the market rent of $825 (as reported by the Census Bureau's American Community Survey) to the FMR. Here, the market rent is below the FMR, indicating that landlords could potentially charge closer to the FMR without pricing themselves out of the market. This suggests that there is room to increase rents to the FMR level, which is beneficial for Section 8 properties. Thus, the answer to the second gating question is that market rent is below FMR, creating an opportunity to align rental rates with the FMR.
The third question pertains to demand. In ZIP 56029, 15.0% of residents are renters, and the days on the market (DOM) data is not available. However, the percentage of renters is relatively low compared to national averages, which typically range between 30-40%. Without DOM data, it's challenging to assess how quickly properties are rented. If the DOM is short, indicating strong demand, then the answer to this gating question leans towards yes, there is sufficient demand. Conversely, if the DOM is long, it might suggest a weak rental market, leading to a more cautious "it depends" stance.
Decision Tree:
In conclusion, based on the provided data, ZIP 56029 presents a viable opportunity for landlords interested in Section 8 investments, especially if they can confirm that properties are rented quickly. However, the low percentage of renters requires careful consideration of the local market dynamics before making a final decision.
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.