Section 8 Fair Market Rent (FMR) for ZIP 56586 - 2027

FY 2027 Fair Market Rent Rates

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

A decision tree for considering whether to buy in ZIP code 56586 for Section 8 investment involves three key questions based on the data provided.

1) Does the Fair Market Rent (FMR) of $1,150 cover the debt service on a property valued at $327,540?

• Yes: The FMR of $1,150 is sufficient to clear the debt service on a property priced at $327,540. This means that the rental income generated from a Section 8 tenant would be enough to cover mortgage payments and other expenses associated with owning the property.
• No: If the FMR does not cover the debt service, then purchasing a property in this ZIP code for Section 8 purposes would not be financially viable. Landlords would need to ensure that the rental income is at least equal to their financial obligations to avoid operating at a loss.

2) How does the market rent of $925 compare to the FMR?

• Above: If the market rent exceeds the FMR, landlords might consider traditional renting rather than Section 8. However, given the specific focus on Section 8, this comparison is secondary to ensuring the FMR covers debt service.
• At: When market rent equals the FMR, it suggests a balanced scenario where Section 8 rents match the general market, making Section 8 properties competitive.
• Below: If the market rent is below the FMR, it indicates a potential advantage for landlords who can secure Section 8 tenants at higher rates compared to the local market.

3) Is the demand for rentals sufficient with 6.1% of the population being renters and an unspecified number of days on the market (DOM)?

• It Depends: With 6.1% of the population as renters, the demand for rental properties is relatively low. However, the lack of data on DOM makes it difficult to assess how quickly properties are rented out. If the DOM is short, it could indicate strong demand despite the low percentage of renters. Conversely, if the DOM is long, it suggests weak demand, which could make it challenging to find and retain tenants.

In conclusion, for ZIP code 56586, the primary considerations are whether the FMR can cover the debt service and the relationship between the FMR and market rent. The demand for rentals, while relevant, requires additional information to make a definitive assessment. Based on the available data, the decision hinges on the financial viability of the investment and the comparative advantage of Section 8 rents over market rates.

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.