Location: Wilkin County, MN | Metro: Fargo, ND-MN MSA
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $770 |
| 1 Bedroom | $840 |
| 2 Bedrooms | $1,100 |
| 3 Bedrooms | $1,510 |
| 4 Bedrooms | $1,530 |
| 5 Bedrooms | $1,775 |
| 6 Bedrooms | $1,988 |
| 7 Bedrooms | $2,147 |
| 8 Bedrooms | $2,254 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,100 | $360,334 | 0.31% | F |
| 3BR | $1,510 | $462,517 | 0.33% | F |
U.S. Census Bureau data (2024)
The economics of Section 8 in ZIP code 56572, which encompasses Pelican Rapids, MN, and Otter Tail County, are straightforward. The SAFMR (Small Area Fair Market Rent) for a two-bedroom apartment in this specific ZIP code for FY 2024 is set at $910. This figure represents the maximum amount that the Housing Choice Voucher program will pay for rent in this area.
However, it's important to understand that the actual reimbursement to landlords is calculated based on a formula that includes both the tenant's contribution and utility allowances. Typically, the tenant is expected to contribute 30% of their adjusted income towards rent. For instance, if a tenant has an adjusted income of $1,000 per month, they would contribute $300 towards the rent.
The remaining amount is covered by the voucher program, up to the SAFMR limit. In addition, the program provides utility allowances to cover electricity, gas, water, and sewer costs. These allowances can vary but are generally around $150-$200 per month for a two-bedroom unit in this region.
To illustrate, let's assume the tenant contributes $300 and the utility allowance is $180. The total reimbursement to the landlord would be $480 ($300 + $180), leaving a gap of $430 between the SAFMR and the total reimbursement. Therefore, landlords must ensure that their rent plus utilities does not exceed $910 to receive full payment from the voucher program.
The local market rent, according to Census ACS data, runs at $617 for a two-bedroom apartment. This suggests that landlords in ZIP 56572 could potentially charge above the average market rate and still receive full reimbursement from the voucher program, provided the total does not exceed $910. However, if the landlord sets the rent at the market rate of $617, the reimbursement gap would be negative, meaning there would be a surplus of approximately $293 per month once the tenant's contribution and utility allowance are factored in.
In conclusion, landlords in ZIP 56572 should aim to keep their rent plus utilities below $910 to fully utilize the Section 8 voucher program. Given the local market rent of $617, there is a significant potential for a surplus, which can be beneficial for maintaining profitability while participating in the program.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.