Location: Watonwan 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 | $165,886 | 0.64% | D |
| 3BR | $1,470 | $203,713 | 0.72% | D |
| 4BR | $1,730 | $234,512 | 0.74% | D |
U.S. Census Bureau data (2024)
A skeptical investor considering Madelia, MN (ZIP 56062) might raise several concerns regarding the feasibility of investing in this area under the Section 8 program. Let's address these objections head-on with the available data.
Will FMR $960 (zip FY 2024) cover the mortgage on a $204,193 home?
The Fair Market Rent (FMR) for ZIP 56062 in fiscal year 2024 is set at $960 per month. To determine if this amount can cover the mortgage on a $204,193 home, we need to consider the interest rate and term of the mortgage. Assuming a 30-year fixed-rate mortgage with an average interest rate of 5%, the monthly payment would be approximately $1,095. This means that the FMR of $960 would not fully cover the mortgage payment. However, it's important to note that this calculation does not account for potential tax benefits or other financial incentives that could offset the mortgage shortfall.
Is there enough renter demand at 19.2%?
The rental demand in Madelia, MN, is estimated at 19.2%. This percentage represents the portion of the housing stock that is rented out. While this figure is relatively low, it indicates that there is still a segment of the population seeking rental properties. The low percentage could suggest a competitive market, but it also reflects a stable community where homeownership is common. It's crucial to assess the local vacancy rates and the number of Section 8 participants to gauge the actual demand for subsidized rentals.
Will vouchers keep pace with $775 market rents?
The market rent in ZIP 56062 is reported at $775 per month. Given that the FMR is higher at $960, landlords participating in the Section 8 program can expect to receive a higher rental income compared to the market rate. However, the question remains whether the voucher amounts will adjust to keep up with any future increases in market rents. Current data does not provide a definitive answer to this, but historically, the Department of Housing and Urban Development (HUD) has adjusted FMRs annually based on changes in the housing market. Investors should monitor HUD updates closely to ensure they remain competitive in the rental market.
In conclusion, while the data presents some challenges, such as the FMR not fully covering the mortgage payment and the relatively low rental demand, it also highlights opportunities. The Section 8 program can offer a steady stream of income through government-backed vouchers, which currently exceed the market rent. For a small-portfolio investor, understanding these dynamics is key to making informed decisions about the viability of investing in Madelia, MN.
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.