2201 2nd Ave SW

Rochester, MN 55902

$279,999F

2 bd · 1.0 ba · 844 sqft · Built 1975 · SingleFamily · Active · 38 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,445/mo
• Mortgage (P&I): −$1,468
• Tax + insurance: −$235
• HOA: −$0
• Vac / Maint / Mgmt: −$303
• Net cashflow: $-563/mo
• Annual: $-6,751/yr
• Cap rate: 3.88%
• Cash-on-cash: -8.61%
• DSCR: 0.62
• 1% rule: 0.52%
• Cash to close: $78,400

Investor read

• This is a 2-bed/1.0-bath single-family listed at $280k.
• At list price, monthly cash flow is $-563 ($-7k/yr) — negative.
• To cash-flow at today's rent, offer at most $181k (35.5% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $144k (48.4% below list).
• It's been on market 38 days — a 3% lower offer ($272k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $144k (48.4% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $8k of value loss. Plan a longer hold.
• Location reads 92/100 on livability (#1 in MN, #27 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, employment A+.
• Rochester Public School District (urban): math 40% / reading 51% proficiency, ranked #152 of 301 in MN (top 50%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: Rents rising (+1.6%/yr); 387 active listings in the ZIP; 7 comparable units currently listed for rent nearby; rentals at typical pace (median 22d on market — plan ~3-4 weeks tenant-placement turnaround); 43% of comp listings sitting > 30 days — soft ceiling on asking rent; high-income renter base; 1,267 units permitted in Olmsted County in 2024 (915 in 5+ unit buildings).
• Olmsted County population projected at +16% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 sale attempts since 7y 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 $159k; list at $280k implies a 76% gain — meaningful room to come down on a strong offer.
• This rent is only 14% of the median local income ($121k/yr) — well below the 30% rent-burden line; pricing power to push rent on renewal without tenant pushback.

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?
• It's been on market 38 days. Have you received any prior offers? Is the seller open to a 48% concession, seller financing, or rate buy-down credit?
• Built in 1975 — 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.