907 2nd Ave NW

Faribault, MN 55021

$129,000B-

2 bd · 1.5 ba · 1,360 sqft · Built 1900 · SingleFamily · Active · 38 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,544/mo
• Mortgage (P&I): −$676
• Tax + insurance: −$167
• HOA: −$0
• Vac / Maint / Mgmt: −$324
• Net cashflow: $376/mo
• Annual: $4,514/yr
• Cap rate: 9.79%
• Cash-on-cash: 12.50%
• DSCR: 1.56
• 1% rule: 1.20%
• Cash to close: $36,120

Investor read

• This is a 2-bed/1.5-bath single-family listed at $129k.
• At list price, monthly cash flow is $376 ($5k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $129k).
• It's been on market 38 days — a 3% lower offer ($125k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $125k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $892 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 76/100 on livability (#158 in MN, #3,440 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: schools C-, employment C-, commute F.
• Faribault Public School District (town): math 17% / reading 34% proficiency, ranked #275 of 301 in MN (top 91%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Watch-outs: built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 165 active listings in the ZIP; 11 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 100% of comp listings sitting > 30 days — soft ceiling on asking rent; 93 units permitted in Rice County in 2024 (0 in 5+ unit buildings).
• 7 sale attempts since 30y ago; this cycle's ask has dropped $21k (14%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $100k; 29% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $36k cash investment doubles in ~10 years — after that, you're playing with house money.
• Cap rate 9.8% vs local median 4.1% in Faribault — 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

• It's been on market 38 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• Built in 1900 — 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.
• 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.