Location: Faribault County, MN | Metro: Faribault County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $710 |
| 1 Bedroom | $860 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,400 |
| 4 Bedrooms | $1,400 |
| 5 Bedrooms | $1,624 |
| 6 Bedrooms | $1,819 |
| 7 Bedrooms | $1,965 |
| 8 Bedrooms | $2,063 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate for ZIP code 56033 reveals a challenging investment scenario due to limited data availability. The Fair Market Rent (FMR) for a two-bedroom apartment in the metro area is set at $970 per month for fiscal year 2026, while the market rent based on Census ACS data stands at $825 per month. To derive the cap rate, we must first calculate the gross yield for both scenarios.
In the case of FMR, the annualized rental income would be $11,640 ($970 x 12 months). For the market rent, it would be $9,900 ($825 x 12 months).
The median home value for ZIP 56033 is not available, which makes calculating the exact cap rate difficult. However, we can still compare the gross yields. With the FMR, the gross yield is higher at $11,640 annually compared to the market rent yield of $9,900 annually.
Given the low renter density of 11.0%, it is less likely that the FMR scenario would be consistently realized over time. Landlords should prepare for periods where the vacancy rate could be higher, impacting the overall yield. Additionally, the lack of data on days on market (DOM) suggests there might be inefficiencies in the rental process, further complicating the investment outlook.
The market rent scenario appears more realistic for landlords and small-portfolio investors considering the low renter density. While the FMR offers a higher gross yield, the stability and consistency of rental income at the market rate are more probable given the available data. Investors should use these figures to inform their decision-making process, understanding that the actual net operating income (NOI) will depend on individual property conditions and management practices.
Data Sources: FMR data from HUD (2027). 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.