326 2nd Ave E

Federal Dam, MN 56641

$209,000D-

5 bd · 3.0 ba · 1,088 sqft · Built 1985 · SingleFamily · Active · 20 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,143/mo
• Mortgage (P&I): −$1,096
• Tax + insurance: −$161
• HOA: −$0
• Vac / Maint / Mgmt: −$240
• Net cashflow: $-354/mo
• Annual: $-4,245/yr
• Cap rate: 4.26%
• Cash-on-cash: -7.25%
• DSCR: 0.68
• 1% rule: 0.55%
• Cash to close: $58,520

Investor read

• This is a 5-bed/3.0-bath single-family listed at $209k.
• At list price, monthly cash flow is $-354 ($-4k/yr) — negative.
• To cash-flow at today's rent, offer at most $147k (29.9% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $114k (45.3% below list).
• It's been on market 20 days — a 2% lower offer ($206k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $114k (45.3% below list) — sets the bar for 1% rule.
• In year one you build about $19k of equity ($1k loan paydown + $18k appreciation (8.6% local appreciation)).
• Location reads 59/100 on livability (#795 in MN) — a working-class tenant base; expect higher turnover. Strengths: cost of living A+; Watch: health & safety C-, crime D+, employment D+.
• Northland Community Schools (rural): math 25% / reading 35% proficiency, ranked #395 of 467 in MN (top 85%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: 9 active listings in the ZIP; 285 units permitted in Cass County in 2024 (0 in 5+ unit buildings).
• Cass County population projected at -20% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• By year 2, paydown + projected appreciation supports a ~$31k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.

Questions for listing agent

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• Crime grade is D in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?
• What's the average days-on-market for RENTAL listings here right now (not sales)? A rising rental-DOM trend means longer vacancies and softer asking-rent achievability than the comps imply.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.
• How much new for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.