Location: Itasca County, MN | Metro: Itasca County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $840 |
| 1 Bedroom | $950 |
| 2 Bedrooms | $1,200 |
| 3 Bedrooms | $1,550 |
| 4 Bedrooms | $1,690 |
| 5 Bedrooms | $1,960 |
| 6 Bedrooms | $2,195 |
| 7 Bedrooms | $2,371 |
| 8 Bedrooms | $2,490 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 56657 reveals some interesting dynamics between federally mandated rental rates and market conditions. For the fiscal year 2026, the Fair Market Rent (FMR) for a 2-bedroom unit is set at $1,160 per month. This translates into an annual rental income of $13,920. Given the median home value in the area is $266,185, we can calculate the implied gross yield under the Section 8 scenario.
To find the gross yield, divide the annual rental income by the property's value. In this case, the gross yield is approximately 5.23%. This figure represents the return on investment if the property were rented exclusively through the Section 8 program, assuming the property is valued at the median home value and the rental rate is fixed at the FMR.
However, the lack of data on market rent and the 0.0% renter density suggest that there might be limited demand for rental properties in ZIP 56657. The Days on Market (DOM) being listed as N/A further complicates the assessment of how quickly a property could be leased at market rates. Without these critical pieces of information, it's challenging to provide a concrete comparison between the Section 8 gross yield and a potential market yield.
Despite the absence of market rent data, the 5.23% gross yield derived from the Section 8 FMR is a solid starting point for analysis. It provides a baseline for what landlords and small-portfolio investors can expect when participating in the Section 8 program. Given the low renter density, it's likely that market rents would be lower or comparable to the FMR, making the Section 8 gross yield a realistic benchmark for potential returns in this ZIP code.
Investors should consider the stability of Section 8 contracts versus the uncertainty of market fluctuations. While the Section 8 program offers guaranteed tenants and stable income, the market scenario presents risks related to vacancy rates and lower rental rates. The choice between these options should be informed by the investor's risk tolerance and long-term goals.
In conclusion, the implied gross yield of 5.23% from the Section 8 FMR provides a clear, albeit conservative, expectation for rental income in ZIP 56657. Given the limited data on market conditions, this yield serves as a reliable reference point for 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.