Location: Sibley 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 | $1,100 |
| 3 Bedrooms | $1,520 |
| 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 | $1,100 | $217,035 | 0.51% | F |
| 3BR | $1,520 | $276,303 | 0.55% | F |
| 4BR | $1,730 | $337,333 | 0.51% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 56058, Le Sueur, MN, reveals a significant difference between the federally determined Fair Market Rent (FMR) and the actual market rent levels. For a two-bedroom apartment, the annualized FMR set by the government for FY 2024 is $1020. This figure implies a gross yield of approximately 0.41% when compared to the median home value of $300,915. The calculation is straightforward: $1020 divided by $300,915 equals 0.003387, or 0.41%. However, this scenario is less realistic given the current market conditions.
In contrast, the market rent for a two-bedroom unit in Le Sueur, as reported by the Census Bureau's American Community Survey (ACS), stands at $907 annually. When annualized against the median home value, this translates to a gross yield of about 0.30%, calculated by dividing $907 by $300,915, resulting in 0.003014, or 0.30%. This lower gross yield is more reflective of the actual rental environment in the area.
The discrepancy between the FMR and market rent highlights the challenges faced by landlords participating in the Section 8 program. With a renter density of 24.6%, it indicates that nearly one-quarter of households in Le Sueur are renters. However, the lack of data on days on market (DOM) suggests that there might be inefficiencies or inaccuracies in the local rental market reporting. Despite this, the market rent of $907 provides a more reliable basis for investment decisions due to its alignment with actual tenant behavior and willingness to pay.
To summarize, while the FMR of $1020 offers a gross yield of 0.41%, the actual market rent of $907 yields a gross return of 0.30%. Landlords and investors should consider the market rent as a more accurate indicator of potential returns, given the local rental market dynamics and the high proportion of renters in the area. This analysis underscores the importance of aligning with market realities rather than relying solely on government-set rates for investment planning.
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.