1211 E 1st St

Duluth, MN 55805

$394,500C

4 bd · 3.0 ba · 2,590 sqft · Built 1891 · MultiFamily · Pending · 67 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,545/mo
• Mortgage (P&I): −$2,069
• Tax + insurance: −$575
• HOA: −$0
• Vac / Maint / Mgmt: −$954
• Net cashflow: $947/mo
• Annual: $11,362/yr
• Cap rate: 9.17%
• Cash-on-cash: 10.29%
• DSCR: 1.46
• 1% rule: 1.15%
• Cash to close: $110,460

Investor read

• This is a 1×3bd/1.0ba + 2×1bd/1.0ba units multifamily listed at $394k.
• At list price, monthly cash flow is $947 ($11k/yr) — positive. Per door: $316/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($5k rent vs $394k).
• It's been on market 67 days — a 6% lower offer ($371k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $371k (6.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $12k of value loss. Plan a longer hold.
• Location reads 82/100 on livability (#36 in MN, #1,060 nationally) — a professional / high-income tenant draw. Strengths: commute A+, cost of living A+, housing A+; Watch: amenities F.
• Duluth Public School District (urban): math 44% / reading 55% proficiency, ranked #132 of 301 in MN (top 44%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1891 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+4.3%/yr); 42 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals at typical pace (median 14d on market — plan ~3-4 weeks tenant-placement turnaround); lower-income renter base — watch delinquency; 639 units permitted in St. Louis County in 2024 (338 in 5+ unit buildings).
• 4 sale attempts with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• Current owner paid $145k; list at $394k implies a 172% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 4.3% rent growth), your $110k cash investment doubles in ~10 years — after that, you're playing with house money.
• Cap rate 9.2% vs local median 4.9% in Duluth — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.
• At $4,545/mo this rent would consume 127% of the median local household income ($43k/yr) (locally 927% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 67 days. Have you received any prior offers? Is the seller open to a 6% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1891 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are B-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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.