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 | $790 |
| 1 Bedroom | $870 |
| 2 Bedrooms | $1,140 |
| 3 Bedrooms | $1,500 |
| 4 Bedrooms | $1,720 |
| 5 Bedrooms | $1,995 |
| 6 Bedrooms | $2,234 |
| 7 Bedrooms | $2,413 |
| 8 Bedrooms | $2,534 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,500 | $221,028 | 0.68% | D |
U.S. Census Bureau data (2024)
A skeptical investor looking into ZIP code 56045 might raise several concerns regarding the feasibility of investing in the area under the Section 8 program. Here, we address those concerns with the available data.
The first objection is whether the Fair Market Rent (FMR) of $970 for the fiscal year 2026 will sufficiently cover the mortgage on a home priced at $188,979. The FMR represents the average rent for a two-bedroom unit, which is typically what landlords aim to rent under the Section 8 program. To determine if this amount covers the mortgage, one must consider the prevailing interest rates and the term of the mortgage. Assuming a fixed-rate mortgage with an interest rate around 4%, the monthly payment on a $188,979 home would be approximately $920. This calculation indicates that the FMR of $970 is indeed sufficient to cover the mortgage payment, leaving a small margin for property taxes, insurance, and maintenance costs.
The second concern revolves around the renter demand at a 10.5% vacancy rate. A vacancy rate of 10.5% suggests that there is a moderate level of competition among landlords to attract tenants. However, it also implies that there is a reasonable pool of potential renters. While a lower vacancy rate would indicate stronger demand, the current rate does not necessarily signify a lack of interest in renting properties. It's important to note that the vacancy rate can fluctuate based on seasonal changes and economic conditions, so maintaining a competitive edge through property quality and location is crucial.
The third objection pertains to the ability of vouchers to keep pace with market rents of $625. The FMR of $970 is higher than the current market rent, indicating that voucher amounts are likely to exceed the typical rent charged in the area. This suggests that landlords in ZIP 56045 could potentially benefit from the difference between the voucher amount and the actual market rent. However, the sustainability of this trend depends on future adjustments to the FMR and the overall housing market dynamics in the region.
In conclusion, while the data provides insights into the financial viability of investing in ZIP 56045 under the Section 8 program, some aspects remain uncertain. The FMR is adequate to cover mortgage payments, but investors should monitor interest rate trends. The vacancy rate indicates moderate demand, which requires strategic positioning to attract tenants. Lastly, the voucher amounts currently surpass market rents, offering a buffer for landlords. However, long-term projections require continued analysis of local market conditions and federal funding adjustments.
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.