Location: Redwood County, MN | Metro: Lyon County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $710 |
| 1 Bedroom | $780 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,400 |
| 4 Bedrooms | $1,530 |
| 5 Bedrooms | $1,775 |
| 6 Bedrooms | $1,988 |
| 7 Bedrooms | $2,147 |
| 8 Bedrooms | $2,254 |
U.S. Census Bureau data (2024)
The ZIP code 56263 is situated in a predominantly owner-occupied neighborhood, with only 7.6% of the 446 residents being renters. The median household income stands at $73,636, indicating a relatively affluent community where most residents can afford to own homes rather than rent. Notably, the median home value is not available, which could suggest a wide range of property values or a lack of recent sales data.
Moving into the realm of rental economics, the Fair Market Rent (FMR) for the metro area in fiscal year 2026 is set at $970. This figure, established by the U.S. Department of Housing and Urban Development (HUD), serves as a benchmark for the rental market. However, the actual market rent, according to the Census Bureau's American Community Survey (ACS), is significantly lower at $567 per month. This disparity between FMR and market rent suggests that there might be opportunities for both hands-off voucher operators and hands-on value-add buyers.
For hands-off voucher operators, the lower market rent compared to the FMR indicates a potential for receiving higher rents through the Section 8 program. Landlords who accept Section 8 vouchers can expect to charge closer to the $970 FMR, thus potentially increasing their revenue above local market rates. Given the affluent nature of the neighborhood, these landlords can also anticipate a stable tenant base with fewer issues related to delinquency or damage.
On the other hand, hands-on value-add buyers can leverage the gap between FMR and market rent to improve properties and command higher rents. By investing in upgrades and amenities, such buyers can position their properties to attract tenants willing to pay closer to the FMR, thereby maximizing returns. The relatively low number of renters in the area also implies a smaller pool of competition, making it easier for value-add investors to stand out.
In summary, ZIP 56263 offers a mix of opportunities for different types of investors. Hands-off operators can benefit from the higher FMR rates while enjoying the stability of an affluent community. Meanwhile, value-add buyers have the potential to increase their rental income by enhancing properties and attracting tenants willing to pay more. Both approaches have merit depending on the investor’s strategy and risk tolerance.
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.