138 1st Ave

Watertown, SD 57201

$150,000C+

3 bd · 1.0 ba · 1,708 sqft · Built 1889 · SingleFamily · Active · 23 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,470/mo
• Mortgage (P&I): −$787
• Tax + insurance: −$95
• HOA: −$0
• Vac / Maint / Mgmt: −$309
• Net cashflow: $280/mo
• Annual: $3,355/yr
• Cap rate: 8.53%
• Cash-on-cash: 7.99%
• DSCR: 1.36
• 1% rule: 0.98%
• Cash to close: $42,000

Investor read

• This is a 3-bed/1.0-bath single-family listed at $150k.
• At list price, monthly cash flow is $280 ($3k/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 $147k (2.0% below list).
• It's been on market 23 days — a 2% lower offer ($148k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $147k (2.0% 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 $4k of value loss. Plan a longer hold.
• Location reads 78/100 on livability (#11 in SD, #2,681 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: commute F.
• Watertown School District 14-4 (town): math 45% / reading 57% proficiency, ranked #28 of 59 in SD (top 48%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1889 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 228 active listings in the ZIP; 160 units permitted in Codington County in 2024 (63 in 5+ unit buildings).
• Codington County population projected at +14% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• Cap rate 8.5% vs local median 2.3% in Watertown — 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

• Built in 1889 — 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?
• 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.