Location: Pipestone County, MN | Metro: Pipestone County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $740 |
| 1 Bedroom | $810 |
| 2 Bedrooms | $1,060 |
| 3 Bedrooms | $1,260 |
| 4 Bedrooms | $1,560 |
| 5 Bedrooms | $1,810 |
| 6 Bedrooms | $2,027 |
| 7 Bedrooms | $2,189 |
| 8 Bedrooms | $2,298 |
U.S. Census Bureau data (2024)
In evaluating whether to invest in ZIP code 56139 for Section 8 properties, follow this decision tree:
1) Does the Fair Market Rent (FMR) of $1,070 cover the debt service on a property valued at $250,151?
If you can secure a mortgage rate that allows the FMR to comfortably exceed your monthly debt service, then proceed to the next question. For a property valued at $250,151, typical debt service might range from $900 to $1,200 depending on the interest rate and terms. With an FMR of $1,070, you would need to ensure that the total rental income, including any additional sources like non-Section 8 tenants, surpasses the debt service costs.
2) Is the market rent of $845 above, at, or below the FMR?
The market rent of $845 is below the FMR of $1,070, which suggests that there is potential for higher rents if you can qualify tenants under the Section 8 program. However, this also means that without Section 8 subsidies, your rental income would be lower than the FMR, making it harder to justify the investment based on rental income alone.
3) Are the 21.1% of renters combined with the unknown days on market (DOM) indicative of sufficient demand?
The percentage of renters at 21.1% indicates a moderate level of demand for rental housing. The lack of data on days on market (DOM) makes it difficult to assess how quickly rental units are typically filled in this area. However, if the local rental market is stable and the vacancy rates are low, this could support the notion that there is enough demand.
Yes: If all three conditions are met—debt service is covered, market rent is below FMR, and there is a moderate level of rental demand—then investing in ZIP 56139 for Section 8 properties is advisable. The combination of these factors suggests a good opportunity to leverage the Section 8 program for financial stability and potentially higher returns.
No: If any of these conditions are not met, particularly if the debt service cannot be covered by the FMR or if market rent is already above FMR, then investing in this ZIP code would not be recommended. In such cases, the financial viability of the investment is compromised.
It Depends: If the debt service is marginal and only slightly covered by the FMR, or if the rental demand is uncertain due to the lack of DOM data, then further investigation is required. Analyze the specific property's condition, location, and potential for attracting Section 8 tenants. Additionally, consider the local economic trends and job market to gauge future demand stability.
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.