Location: Otter Tail County, MN | Metro: Douglas County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $760 |
| 1 Bedroom | $780 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,410 |
| 4 Bedrooms | $1,490 |
| 5 Bedrooms | $1,728 |
| 6 Bedrooms | $1,935 |
| 7 Bedrooms | $2,090 |
| 8 Bedrooms | $2,195 |
U.S. Census Bureau data (2024)
In ZIP code 56354, the economics of Section 8 housing can be quite straightforward when understood correctly. The SAFMR (Small Area Fair Market Rent) for a two-bedroom apartment in this ZIP code for fiscal year 2026 is set at $970. This figure represents the maximum amount that the Housing Choice Voucher program will pay for rent in this specific area. However, the local market rent, based on Census ACS data, is currently at $900. This means landlords should be aware of the actual market conditions while considering the SAFMR.
A voucher payment under Section 8 is composed of several parts: the government subsidy, the tenant's portion of the rent, and utility allowances. For a two-bedroom unit, the landlord receives a subsidy from the government, which is capped at the SAFMR. The tenant contributes a fixed percentage of their income toward the rent, typically around 30%. Any rent above the SAFMR is the responsibility of the tenant, but it cannot exceed the total rent they agree to pay.
Utility allowances are also part of the equation. These allowances cover a portion of the tenant's utility costs, such as electricity, gas, and water. The exact amount of these allowances varies but is generally lower than the actual utility expenses. Landlords need to understand that the voucher payment does not cover all utilities; tenants must still pay a portion out-of-pocket.
To illustrate, if a landlord sets the rent at the SAFMR of $970, the government would pay up to $970 per month, depending on the tenant's income. If the tenant's share is $200, then the landlord receives $770 from the government plus the $200 from the tenant, totaling $970. Utility allowances might add an additional $100 to $150 per month, bringing the total to approximately $1,070 to $1,120.
Given that the local market rent is $900, landlords accepting Section 8 vouchers in ZIP 56354 may find themselves receiving slightly more than the average market rate, especially when accounting for the utility allowances. However, this surplus is not guaranteed, as the tenant's contribution is based on their income, and the government subsidy may be less than the SAFMR if the tenant's income is low enough.
The typical reimbursement gap or surplus for a two-bedroom unit in this ZIP code would therefore be a small surplus, assuming the landlord charges the SAFMR and includes utility allowances. In this scenario, the landlord could expect a monthly surplus of about $70 to $120, which is the difference between the SAFMR and the local market rent. This makes Section 8 a relatively stable source of income compared to the fluctuating local rental market.
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.