Location: Redwood County, MN | Metro: Lyon County, MN
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 | $760 |
| 1 Bedroom | $870 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,390 |
| 4 Bedrooms | $1,660 |
| 5 Bedrooms | $1,926 |
| 6 Bedrooms | $2,157 |
| 7 Bedrooms | $2,330 |
| 8 Bedrooms | $2,447 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,390 | $140,755 | 0.99% | C |
U.S. Census Bureau data (2024)
A landlord considering ZIP 56175 for Section 8 investments must follow a structured decision-making process based on the following criteria:
1) Debt Service Coverage Ratio (DSCR): The Fair Market Rent (FMR) for the metro area in fiscal year 2026 is $970. This figure needs to be compared against the debt service of a property priced at $160,151. To determine if the FMR clears the debt service, calculate the DSCR. A DSCR greater than 1 indicates that the rental income exceeds the debt service, making it feasible to cover expenses and maintain profitability. If the calculated DSCR is less than 1, then the answer is No; the rental income would not sufficiently cover the debt service.
2) Market Rent vs. FMR: The average market rent in ZIP 56175, according to Census ACS data, is $760. This is below the FMR of $970. Landlords can charge up to the FMR, which means there's potential for higher rents than the current market rate. However, the difference between the market rent and FMR must be considered in light of local demand and willingness to pay higher rents. If the market rent is significantly lower than the FMR, it suggests that tenants might find it challenging to afford the higher rates, leading to It Depends. Further analysis of tenant demographics and housing preferences is required.
3) Demand Indicators: In ZIP 56175, 16.0% of residents are renters. However, the Days on Market (DOM) data is not available. The percentage of renters alone does not provide a complete picture of demand; the lack of DOM data introduces uncertainty. If the percentage of renters is high and the DOM is low, indicating quick turnover, it suggests strong demand. Conversely, if the DOM is high, it implies weak demand. Given the incomplete DOM data, the answer is It Depends. Additional research into the local rental market trends and vacancy rates will help clarify the demand situation.
Decision Tree Summary:
To make a final decision, landlords should also consider other factors such as property management costs, local competition, and the overall economic health of the area. These elements will further refine the investment suitability assessment.
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.