Location: Lake of the Woods County, MN | Metro: Koochiching County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $810 |
| 1 Bedroom | $890 |
| 2 Bedrooms | $1,160 |
| 3 Bedrooms | $1,390 |
| 4 Bedrooms | $1,700 |
| 5 Bedrooms | $1,972 |
| 6 Bedrooms | $2,209 |
| 7 Bedrooms | $2,386 |
| 8 Bedrooms | $2,505 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 56623 provides a clear picture of the financial viability of properties in this area for landlords and small-portfolio investors. Using the annualized Fair Market Rent (FMR) for a two-bedroom apartment at $1,000 per month (FY 2026, metro), the implied gross yield can be calculated. With a median home value of $220,953, this translates into an annual rental income of $12,000, resulting in a gross yield of approximately 5.43%. This calculation assumes the property is rented out as a two-bedroom unit at the FMR rate.
However, using the market rent figure of $942 per month (from Census ACS), the annual rental income drops to $11,304. This yields a gross return of about 5.12%, indicating a slightly lower potential for rental income compared to the FMR scenario. The difference between these two figures highlights the gap between government-set rents and actual market conditions, which is critical for investors to understand.
Given the 18.2% renter density in ZIP 56623, it's important to note that while this percentage is relatively low, it still represents a significant portion of the population that could potentially benefit from Section 8 housing. The N/A-day Days on Market (DOM) suggests either a very competitive market or limited data availability, making it difficult to gauge how quickly properties might be rented out under the program.
In terms of realism, the market rent scenario is likely more reflective of the actual rental income a landlord can expect. While the FMR provides a benchmark for what the government deems as fair rent, market dynamics often dictate lower rates, especially in areas with lower renter density. Therefore, when considering the acquisition of properties for Section 8 investment in ZIP 56623, the gross yield based on market rent at 5.12% should be used as a more accurate basis for financial projections.
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.