Location: Moody County, SD | Metro: Lincoln County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $710 |
| 1 Bedroom | $780 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,210 |
| 4 Bedrooms | $1,500 |
| 5 Bedrooms | $1,740 |
| 6 Bedrooms | $1,949 |
| 7 Bedrooms | $2,105 |
| 8 Bedrooms | $2,210 |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $970 for ZIP code 56164 in fiscal year 2026 will sufficiently cover the mortgage on a home valued at $181,664. To evaluate this, consider the typical mortgage payment on a home of that value. Assuming a 30-year fixed-rate mortgage at an average interest rate of 4%, the monthly payment would be approximately $875. This figure is based on the principal and interest only, without factoring in property taxes, insurance, and other costs. The FMR of $970 comfortably exceeds this amount, suggesting that it can indeed cover the mortgage.
The second objection could be whether the rental market demand, represented by the 24.4% share of renters in the area, is sufficient. While 24.4% may seem low, it translates into a significant number of potential tenants. According to the latest data, this percentage indicates a stable demand for rental properties. However, the data does not provide the total population of ZIP 56164, which would give a clearer picture of the absolute number of renters. Nonetheless, the presence of any demand, especially in a housing market, is indicative of opportunities for landlords and small-portfolio investors.
A third concern might be if Housing Choice Vouchers will keep up with the market rents, currently at $742. The voucher amount is tied to the FMR, which is set to increase to $970 in fiscal year 2026. This suggests that vouchers will indeed keep pace with market rents, providing a reliable source of income for landlords who participate in the program. It's important to note that while the voucher amount is expected to rise, the actual distribution and usage rates can vary, impacting the reliability of this income source.
In summary, the FMR of $970 for fiscal year 2026 is projected to cover the mortgage payments on a home priced at $181,664. The 24.4% share of renters indicates a stable but not overwhelming demand for rental units. Lastly, Housing Choice Vouchers are anticipated to align with market rents, ensuring that landlords can maintain steady income streams. These points provide a solid basis for investment consideration, though further research into local market specifics is recommended.
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.