Location: Todd County, MN | Metro: Otter Tail County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $810 |
| 1 Bedroom | $840 |
| 2 Bedrooms | $1,090 |
| 3 Bedrooms | $1,440 |
| 4 Bedrooms | $1,660 |
| 5 Bedrooms | $1,926 |
| 6 Bedrooms | $2,157 |
| 7 Bedrooms | $2,330 |
| 8 Bedrooms | $2,447 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 56453 reveals some interesting insights into the potential rental income streams for landlords and small-portfolio investors. The Federal Market Rent (FMR) for a 2-bedroom unit in the fiscal year 2026 is set at $1,030 annually, while the market rent based on Census ACS data is $942.
To calculate the implied gross yield, we need to consider these annual rents against the median home value of $226,291. For the Section 8 scenario, the annual rent of $1,030 translates to an implied gross yield of approximately 0.45%. This is calculated by taking the annual rent ($1,030) and dividing it by the median home value ($226,291).
In contrast, the market rent of $942 yields an implied gross yield of about 0.42%. This calculation is done similarly by dividing the annual market rent ($942) by the median home value ($226,291).
Given the 7.6% renter density in ZIP 56453, it's important to note that the demand for rental properties, including those under the Section 8 program, might be lower compared to areas with higher renter populations. However, the fact that the FMR is slightly above the market rent suggests that the Section 8 program could offer a marginally better gross yield for landlords willing to participate.
The N/A-day Days on Market (DOM) indicates that there isn't sufficient data to provide an accurate average time it takes for a property to be rented out. This could mean that the market is either stable, with consistent occupancy rates, or that there is insufficient turnover data to draw meaningful conclusions about the speed of renting properties.
In summary, the Section 8 program offers a gross yield of 0.45%, which is slightly higher than the market yield of 0.42%. Given the low renter density, the Section 8 option may provide more stability and a slightly better return on investment for landlords in ZIP 56453.
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.