2126 3rd Avenue Nw Home Site #63

Owatonna, MN 55060

$89,000C-

2 bd · 2.0 ba · 840 sqft · Built 2025 · Manufactured · Active · 258 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $869/mo
• Mortgage (P&I): −$467
• Tax + insurance: −$67
• HOA: −$0
• Vac / Maint / Mgmt: −$182
• Net cashflow: $153/mo
• Annual: $1,836/yr
• Cap rate: 8.36%
• Cash-on-cash: 7.37%
• DSCR: 1.33
• 1% rule: 0.98%
• Cash to close: $24,920

Investor read

• This is a 2-bed/2.0-bath manufactured listed at $89k.
• At list price, monthly cash flow is $153 ($2k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $87k (2.4% below list).
• It's been on market 258 days — a 12% lower offer ($78k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $78k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $615 of loan paydown is wiped out by about $3k of value loss. Plan a longer hold.
• Location reads 76/100 on livability (#155 in MN, #3,413 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, crime A; Watch: amenities D-, commute F, health & safety D-.
• Owatonna Public School District (town): math 38% / reading 47% proficiency, ranked #194 of 301 in MN (top 64%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Wilson Elementary (math 42% / reading 32%, grade F, #636 of 857 statewide, top 76%, 537 students, 75% FRL); Owatonna Middle School (math 25% / reading 42%, grade F, #182 of 258 statewide, top 71%, 999 students, 49% FRL); Owatonna Senior High (math 49% / reading 65%, grade C, #64 of 471 statewide, top 16%, 1,475 students, 39% FRL) — zoned schools average 54% FRL vs 34% district-wide (21 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: 222 active listings in the ZIP; 11 comparable units currently listed for rent nearby; rentals lingering (median 46d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 100% of comp listings sitting > 30 days — soft ceiling on asking rent; solid renter incomes; 28 units permitted in Steele County in 2024 (0 in 5+ unit buildings).
• Steele County population projected to shrink 10% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 3 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.
• Cap rate 8.4% vs local median 3.2% in Owatonna — 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.
• This rent is only 12% of the median local income ($85k/yr) — well below the 30% rent-burden line; pricing power to push rent on renewal without tenant pushback.

Questions for listing agent

• It's been on market 258 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• 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.
• 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.