Location: Beltrami County, MN | Metro: Beltrami County, MN
| Unit Size | Monthly FMR |
|---|---|
| Studio | $860 |
| 1 Bedroom | $940 |
| 2 Bedrooms | $1,210 |
| 3 Bedrooms | $1,450 |
| 4 Bedrooms | $1,940 |
| 5 Bedrooms | $2,250 |
| 6 Bedrooms | $2,520 |
| 7 Bedrooms | $2,722 |
| 8 Bedrooms | $2,858 |
U.S. Census Bureau data (2024)
A decision tree for evaluating whether to invest in ZIP code 56667 for Section 8 properties hinges on three key factors: Fair Market Rent (FMR), market rent comparison, and rental demand. Let's break down each step.
Step 1: Debt Service Coverage Ratio (DSCR)
The first question is whether the Fair Market Rent ($1,180 per month for the metro area in fiscal year 2026) can cover the debt service on a property valued at $233,019. To determine this, you need to calculate the DSCR. Assuming a typical mortgage rate and term, the monthly debt service would be around $1,150 based on a 4% interest rate over a 30-year period. Since the FMR is higher than the debt service, the answer is Yes: the FMR does clear the debt service, making the property financially viable under Section 8 guidelines.
Step 2: Market Rent Comparison
The second question involves comparing the local market rent to the FMR. For ZIP 56667, the market rent is listed as N/A, which means there isn't sufficient data to make a direct comparison. This situation leads to an It Depends scenario. Without concrete market rent figures, you cannot definitively say if the market rent is above, at, or below the FMR. However, you can infer that if the market rent is generally lower than the FMR, then Section 8 could offer a stable income source. Conversely, if the market rent is significantly higher, you might consider the opportunity cost of renting exclusively to Section 8 tenants.
Step 3: Rental Demand
The third question evaluates the rental demand in ZIP 56667. Here, we see that 9.6% of residents are renters, and the days on market (DOM) is listed as N/A. The percentage of renters indicates a modest demand for rental properties. However, without knowing the DOM, it's challenging to assess how quickly properties are rented out. Given the limited data, the answer is again It Depends. A low DOM would suggest strong demand, while a high DOM might indicate that rental properties take longer to fill, affecting cash flow and investment returns.
Summary
In conclusion, ZIP 56667 shows potential for Section 8 investments based on the ability of the FMR to cover debt service. However, the lack of specific market rent and DOM data means you need to do more research before making a final decision. Ensure you understand the local rental dynamics and the speed at which properties are filled to make an informed choice.
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.