Location: Swift County, MN | Metro: Swift County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $710 |
| 1 Bedroom | $830 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,380 |
| 4 Bedrooms | $1,390 |
| 5 Bedrooms | $1,612 |
| 6 Bedrooms | $1,805 |
| 7 Bedrooms | $1,949 |
| 8 Bedrooms | $2,046 |
U.S. Census Bureau data (2024)
The analysis for ZIP code 56249, which encompasses Holloway, MN, reveals a significant gap between the Fair Market Rent (FMR) and the actual market rent. The FMR for the metro area in fiscal year 2026 is set at $970, while the Census ACS reports the market rent at $585. This discrepancy amounts to a $385 difference, representing a 65.8% premium for FMR over the market rent.
The gap underscores an opportunity for landlords and small-portfolio investors. Despite the lower market rent, the FMR provides a higher guaranteed income through Section 8 vouchers, making it a compelling yield play. Voucher tenants ensure steady cash flow and reduce vacancy risks, which are critical factors for maximizing returns on investment properties.
However, accepting Section 8 voucher tenants also means operating below open-market rates. Landlords must consider the implications of this decision. While the FMR of $970 is above the market rate of $585, it still represents a subsidy to the landlord, effectively reducing their profit margin compared to renting out units at the highest possible market rate. This subsidy is essential for affordability but can impact the overall profitability of the investment.
The context of Holloway, MN, further illuminates the situation. With only 15.7% of residents being renters, the demand for rental properties might be lower than in more densely populated areas. Additionally, the median household income of $72,250 suggests that local residents have the financial capacity to pay market rates, potentially leading to competition between market-rate and voucher-supported tenants.
To summarize, the $385 gap between FMR and market rent in ZIP 56249 presents a strategic decision point for landlords. Accepting Section 8 vouchers can stabilize occupancy and provide a predictable income stream, aligning with the goal of maximizing yield. However, it also entails operating below the potential peak market rates, which could influence long-term financial planning and property management strategies.
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.