1021 S 7th St

Brainerd, MN 56401

$185,000D-

2 bd · 4.0 ba · 1,344 sqft · Built 1980 · SingleFamily · Pending · 6 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,372/mo
• Mortgage (P&I): −$970
• Tax + insurance: −$174
• HOA: −$0
• Vac / Maint / Mgmt: −$288
• Net cashflow: $-60/mo
• Annual: $-723/yr
• Cap rate: 5.90%
• Cash-on-cash: -1.40%
• DSCR: 0.94
• 1% rule: 0.74%
• Cash to close: $51,800

Investor read

• This is a 2-bed/4.0-bath single-family listed at $185k.
• At list price, monthly cash flow is $-60 ($-723/yr) — negative.
• To cash-flow at today's rent, offer at most $174k (5.8% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $137k (25.8% below list).
• Only 6 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $137k (25.8% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $6k of value loss. Plan a longer hold.
• Location reads 72/100 on livability (#272 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: crime D, amenities F, commute F.
• Brainerd Public School District (town): math 49% / reading 58% proficiency, ranked #85 of 301 in MN (top 28%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Market conditions: 401 active listings in the ZIP; 420 units permitted in Crow Wing County in 2024 (17 in 5+ unit buildings).
• Crow Wing County population projected to shrink 8% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 2 sale attempts since 18y 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.
• Climate carrying-cost: moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 5.9% vs local median 3.1% in Brainerd — 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.

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?
• 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.
• 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.