Location: Otter Tail County, MN | Metro: Otter Tail County, MN
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 | $720 |
| 1 Bedroom | $800 |
| 2 Bedrooms | $1,040 |
| 3 Bedrooms | $1,430 |
| 4 Bedrooms | $1,450 |
| 5 Bedrooms | $1,682 |
| 6 Bedrooms | $1,884 |
| 7 Bedrooms | $2,035 |
| 8 Bedrooms | $2,137 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,430 | $361,488 | 0.4% | F |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate for ZIP code 56573 reveals a distinct difference between using the Fair Market Rent (FMR) and the actual market rent figures. The annualized 2BR FMR for fiscal year 2026 stands at $970, while the Census ACS reported market rent for the same configuration is $862.
To calculate the gross yield, we must first annualize these figures. For the FMR scenario, the annual rent would be $11,640 ($970 multiplied by 12 months). Dividing this figure by the median home value of $352,263 yields an implied gross yield of approximately 3.3%. On the other hand, the market rent annualizes to $10,344 ($862 multiplied by 12), resulting in a gross yield of about 2.9% when compared to the median home value.
The gross yield calculation based on the FMR suggests a higher potential return for landlords participating in the Section 8 program. However, it's important to consider the reality of the local rental market and the specifics of the Section 8 program in ZIP 56573. With a renter density of 27.5%, the likelihood of finding qualified tenants who can benefit from the Section 8 program might be lower compared to areas with higher renter populations. Additionally, the N/A-day DOM (Days on Market) indicates that there is no available data regarding how long properties typically remain on the market before being rented out, which could suggest either a stable rental market or a lack of recent activity that affects the reliability of the data.
In practice, landlords should lean towards the market rent figure of $862 per month for a more accurate assessment of potential returns. This figure, derived from actual rental transactions, reflects the true demand and supply dynamics of the area. While the FMR of $970 offers a more optimistic outlook, it does not necessarily represent what landlords can charge in a competitive market environment. Given the median home value and the current market conditions, the gross yield of 2.9% is a more realistic expectation for landlords considering participation in the Section 8 program in ZIP 56573.
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.