406 and 408 John St

Decorah, IA 52101

$725,000F

None bd · None ba · 3,072 sqft · Built 1908 · Townhouse · Pending · 9 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,297/mo
• Mortgage (P&I): −$3,802
• Tax + insurance: −$1,088
• HOA: −$0
• Vac / Maint / Mgmt: −$272
• Net cashflow: $-3,865/mo
• Annual: $-46,386/yr
• Cap rate: -0.11%
• Cash-on-cash: -22.85%
• DSCR: -0.02
• 1% rule: 0.18%
• Cash to close: $203,000

Investor read

• This is a townhouse listed at $725k.
• At list price, monthly cash flow is $-4k ($-46k/yr) — negative.
• To cash-flow at today's rent, offer at most $148k (79.5% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $130k (82.1% below list).
• Only 9 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $130k (82.1% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $5k of loan paydown is wiped out by about $22k of value loss. Plan a longer hold.
• Location reads 85/100 on livability (#16 in IA, #499 nationally) — a professional / high-income tenant draw. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities F, commute F.
• Decorah Community School District (town): math 80% / reading 84% proficiency, ranked #21 of 289 in IA (top 7%) — strong family-tenant draw, lease renewals of 3-5y typical; only 18% free/reduced lunch — higher-income household profile.
• Zoned schools: Decorah Middle School (math 77% / reading 83%, grade A+, #32 of 246 statewide, top 13%, 461 students, 26% FRL); Decorah High School (math 85% / reading 92%, grade A, #3 of 336 statewide, top 1%, 576 students, 22% FRL).
• Watch-outs: built in 1908 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 75 active listings in the ZIP; 49 units permitted in Winneshiek County in 2024 (0 in 5+ unit buildings).
• Winneshiek County population projected at -15% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 2 sale attempts since 4y 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 $540k; 34% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate -0.1% vs local median 3.4% in Decorah — below-typical yield; the buyer is paying a premium for something (appreciation thesis, condition, location) that the cap rate doesn't capture.

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 1908 — 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 A-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?
• 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.