Location: Stevens County, MN | Metro: Big Stone County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $840 |
| 1 Bedroom | $990 |
| 2 Bedrooms | $1,210 |
| 3 Bedrooms | $1,440 |
| 4 Bedrooms | $1,590 |
| 5 Bedrooms | $1,844 |
| 6 Bedrooms | $2,065 |
| 7 Bedrooms | $2,230 |
| 8 Bedrooms | $2,342 |
U.S. Census Bureau data (2024)
In ZIP code 56225, the Section 8 economics present a unique scenario for landlords and small-portfolio investors. The SAFMR (Small Area Fair Market Rent) for a two-bedroom apartment in this specific ZIP code for fiscal year 2026 is set at $1,120. However, the local market rent, according to Census ACS data, is significantly lower at $635. This discrepancy is crucial to understand when considering the financial implications of renting to tenants with Section 8 vouchers.
A voucher payment from the Housing Choice Voucher program is calculated based on the difference between the SAFMR and the tenant's portion of the rent, plus any utility allowances. The tenant is typically responsible for paying 30% of their adjusted income towards rent. If we assume an average adjusted income of $1,800 per month, the tenant would contribute approximately $540 towards the rent. The remaining balance is covered by the government, up to the SAFMR limit. For example, if the actual rent charged is $1,120, the government would pay $580 ($1,120 - $540) to the landlord.
The utility allowance varies but can be estimated around $300 per month for a two-bedroom unit. This amount is also paid directly to the landlord. Therefore, the total reimbursement a landlord might receive from a voucher for a two-bedroom unit in ZIP 56225 could be around $880 ($580 + $300).
This calculation shows that landlords who rent at the SAFMR rate will face a significant gap between the reimbursement received and the actual market rent. In this case, the gap is $485 ($1,120 - $635), meaning landlords must either accept a lower rental rate or subsidize the difference themselves. Conversely, landlords who charge below the market rate of $635 will see a surplus, though they should aim to stay close to the market rate to ensure fair compensation.
To summarize, the economics of Section 8 in ZIP 56225 indicate that landlords will likely experience a reimbursement gap of $485 for a two-bedroom unit, given the disparity between the SAFMR and the local market rent. This gap must be managed carefully to maintain profitability and sustainability in rental operations.
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.