Location: Cass County, MN | Metro: Cass County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $770 |
| 1 Bedroom | $810 |
| 2 Bedrooms | $1,060 |
| 3 Bedrooms | $1,400 |
| 4 Bedrooms | $1,780 |
| 5 Bedrooms | $2,065 |
| 6 Bedrooms | $2,313 |
| 7 Bedrooms | $2,498 |
| 8 Bedrooms | $2,623 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 56641 reveals two distinct scenarios based on the Fair Market Rent (FMR) and the market rent figures. Using the annualized 2BR FMR of $990 (for FY 2026), the implied gross yield for properties in this area would be approximately 3.8%. This calculation is derived by dividing the annual rental income ($990 x 12 months = $11,880) by the median home value of $260,989.
In contrast, using the market rent figure of $917 per month, the implied gross yield drops to about 3.5%. This is calculated by multiplying the monthly market rent by 12 months ($917 x 12 = $11,004) and then dividing by the median home value ($260,989).
The difference between these two yields is significant, even if only slightly. The FMR scenario suggests a higher potential return at 3.8%, while the market rent scenario indicates a lower return at 3.5%. Given the 22.1% renter density in the area, it's important to note that a significant portion of the population might prefer homeownership over renting, which could affect the demand for rental properties.
The N/A-day DOM (Days on Market) data implies that there isn't sufficient information to gauge how quickly rental units are typically leased in this ZIP code. However, considering the relatively low renter density, the market rent scenario might be more realistic. Landlords should expect that the actual rental income may align more closely with the market rent rather than the FMR, especially if there is competition from homeownership options.
In conclusion, while the FMR-based gross yield is higher at 3.8%, the market rent-based gross yield of 3.5% appears to be a more accurate reflection of potential returns in ZIP code 56641. Investors should adjust their expectations accordingly and factor in the local rental market dynamics when making investment decisions.
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.