400 Cottage Ave

Hendricks, MN 56136

$130,000D

2 bd · 1.0 ba · 1,092 sqft · Built 1966 · SingleFamily · Active · 13 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $974/mo
• Mortgage (P&I): −$682
• Tax + insurance: −$209
• HOA: −$0
• Vac / Maint / Mgmt: −$205
• Net cashflow: $-121/mo
• Annual: $-1,452/yr
• Cap rate: 5.18%
• Cash-on-cash: -3.99%
• DSCR: 0.82
• 1% rule: 0.75%
• Cash to close: $36,400

Investor read

• This is a 2-bed/1.0-bath single-family listed at $130k.
• At list price, monthly cash flow is $-121 ($-1k/yr) — negative.
• To cash-flow at today's rent, offer at most $109k (16.4% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $97k (25.1% below list).
• Only 13 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $97k (25.1% below list) — sets the bar for 1% rule.
• In year one you build about $10k of equity ($899 loan paydown + $9k appreciation (6.8% local appreciation)).
• Location reads 76/100 on livability (#151 in MN, #3,376 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: crime D, employment D, commute F.
• Hendricks Public School District (rural): math 50% / reading 70% proficiency, ranked #153 of 467 in MN (top 33%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Hendricks Elementary (math 54% / reading 54%, grade C, #320 of 857 statewide, top 41%, 98 students, 50% FRL); Hendricks Senior High (math 75% / reading 75%, grade A-, #6 of 471 statewide, top 2%, 47 students, 51% FRL) — zoned schools average 51% FRL vs 34% district-wide (17 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: 10 active listings in the ZIP; 13 units permitted in Lincoln County in 2024 (0 in 5+ unit buildings).
• Lincoln County population projected at -18% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 2 sale attempts since 13y ago 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 $50k; list at $130k implies a 157% gain — meaningful room to come down on a strong offer.
• By year 4, paydown + projected appreciation supports a ~$33k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.

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?
• Built in 1966 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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?
• 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.