Location: Rice County, MN | Metro: Le Sueur County, MN HUD Metro FMR Area
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 | $810 |
| 1 Bedroom | $850 |
| 2 Bedrooms | $1,110 |
| 3 Bedrooms | $1,530 |
| 4 Bedrooms | $1,800 |
| 5 Bedrooms | $2,088 |
| 6 Bedrooms | $2,339 |
| 7 Bedrooms | $2,526 |
| 8 Bedrooms | $2,652 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,110 | $261,443 | 0.42% | F |
| 3BR | $1,530 | $327,412 | 0.47% | F |
| 4BR | $1,800 | $364,720 | 0.49% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis for ZIP code 56069 in Montgomery, Minnesota, is centered around the discrepancy between the Fair Market Rent (FMR) and the actual market rent. The FMR for ZIP 56069 in fiscal year 2024 is set at $1200, while the Census ACS data indicates that the average market rent is $959. This creates a significant gap of $241, or approximately 25%, between what landlords can charge through the Section 8 program and the prevailing market rates.
In this scenario, where the FMR exceeds the market rent, voucher tenants present a compelling yield opportunity for landlords and small-portfolio investors. By participating in the Section 8 program, landlords can secure higher rental income than what is typically available in the open market. For instance, an apartment that might rent for $959 in the open market could be leased to a Section 8 tenant for $1200, significantly boosting the property's cash flow and return on investment.
The median home value in Montgomery is $322,277, and the median household income is $87,118. With 19.1% of residents being renters, there is a notable demand for affordable housing. The Section 8 program helps meet this demand by subsidizing rents for low-income families, making it easier for them to find suitable accommodation.
However, it's important to note that while the FMR allows for higher rents, landlords must still adhere to the program's regulations and guidelines. This includes maintaining the property to certain standards and undergoing regular inspections. Additionally, the process of obtaining and retaining Section 8 tenants can be more administratively complex compared to renting to open-market tenants.
In summary, the $241 gap between the FMR and the market rent in ZIP 56069 represents a substantial yield enhancement opportunity. Given the local context of Montgomery, MN, with its relatively high median home value and moderate median income, the Section 8 program offers a strategic way for landlords to maximize their rental income while providing affordable housing options to those who need them most.
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.