Location: Otter Tail County, MN | Metro: Douglas County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $720 |
| 1 Bedroom | $780 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,410 |
| 4 Bedrooms | $1,430 |
| 5 Bedrooms | $1,659 |
| 6 Bedrooms | $1,858 |
| 7 Bedrooms | $2,007 |
| 8 Bedrooms | $2,107 |
U.S. Census Bureau data (2024)
The analysis of Section 8 real estate in ZIP 56361 reveals a significant gap between the Fair Market Rent (FMR) and the actual market rent. The FMR for ZIP 56361 is set at $970 for the fiscal year 2026, while the market rent based on the latest Census ACS data is $807. This means there is a $163 gap, which translates to a 20.2% difference between the two figures.
Given that the FMR exceeds the market rent, this scenario presents a yield play for landlords and small-portfolio investors. Voucher tenants can provide a steady, government-backed income stream that exceeds the prevailing market rates. This is particularly advantageous considering that only 16.7% of residents are renters, indicating a lower competition in the rental market.
The median home value in ZIP 56361 is $266,223, reflecting the overall property values in the area. However, the median income stands at $70,541, which suggests that many residents may struggle to afford market-rate rents without assistance. Thus, Section 8 vouchers can bridge this affordability gap, making it easier for landlords to fill their properties with reliable tenants.
In summary, the $163 gap between the FMR and market rent in ZIP 56361, representing a 20.2% difference, indicates a favorable environment for landlords who accept Section 8 vouchers. This approach can lead to higher yields compared to open-market rates, given the relatively low number of renters and the economic context of the area.
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.