3609 E 42nd St

Minneapolis, MN 55406

$335,000B-

3 bd · 2.0 ba · 1,156 sqft · Built 1900 · MultiFamily · Active · 18 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,871/mo
• Mortgage (P&I): −$1,757
• Tax + insurance: −$212
• HOA: −$0
• Vac / Maint / Mgmt: −$813
• Net cashflow: $1,089/mo
• Annual: $13,071/yr
• Cap rate: 10.19%
• Cash-on-cash: 13.93%
• DSCR: 1.62
• 1% rule: 1.16%
• Cash to close: $93,800

Investor read

• This is a 2 × 3-bed/2.0-bath units multifamily listed at $335k.
• At list price, monthly cash flow is $1k ($13k/yr) — positive. Per door: $545/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($4k rent vs $335k).
• It's been on market 18 days — a 2% lower offer ($330k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $330k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $10k of value loss. Plan a longer hold.
• Location reads 78/100 on livability (#110 in MN, #2,525 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, housing A+; Watch: cost of living C-, crime F.
• Minneapolis Public School District (urban): math 35% / reading 46% proficiency, ranked #217 of 301 in MN (top 72%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+3.0%/yr); 154 active listings in the ZIP; 13 comparable units currently listed for rent nearby; rentals leasing fast (median 9d on market — plan ~1-2 weeks tenant-placement turnaround); solid renter incomes; 4,651 units permitted in Hennepin County in 2024 (2,443 in 5+ unit buildings).
• Hennepin County population projected at +30% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 4 sale attempts since 28y 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.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $94k cash investment doubles in ~9 years — after that, you're playing with house money.
• Cap rate 10.2% vs local median 3.1% in Minneapolis — 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 $3,871/mo this rent would consume 49% of the median local household income ($94k/yr) (locally 1026% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• 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 1900 — 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.
• Crime grade is F 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?
• 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 apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.