12 Linney St

Babbitt, MN 55706

$425,000D-

5 bd · 4.0 ba · 1,728 sqft · Built 1977 · MultiFamily · Active · 95 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,168/mo
• Mortgage (P&I): −$2,229
• Tax + insurance: −$500
• HOA: −$0
• Vac / Maint / Mgmt: −$665
• Net cashflow: $-226/mo
• Annual: $-2,717/yr
• Cap rate: 5.65%
• Cash-on-cash: -2.28%
• DSCR: 0.90
• 1% rule: 0.75%
• Cash to close: $119,000

Investor read

• This is a 4 × 2-bed/1.0-bath units multifamily listed at $425k.
• At list price, monthly cash flow is $-226 ($-3k/yr) — negative. Per door: $-57/mo.
• To cash-flow at today's rent, offer at most $385k (9.4% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $317k (25.5% below list).
• It's been on market 95 days — a 9% lower offer ($387k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $317k (25.5% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $13k of value loss. Plan a longer hold.
• Location reads 76/100 on livability (#156 in MN, #3,426 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: schools C-, employment C-, amenities F.
• St. Louis County School District (rural): math 34% / reading 49% proficiency, ranked #212 of 301 in MN (top 70%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: 23 active listings in the ZIP; 639 units permitted in St. Louis County in 2024 (338 in 5+ unit buildings).
• 6 sale attempts since 5y ago; this cycle's ask has dropped $24k (5%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $230k; list at $425k implies a 85% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 5.7% vs local median 2.8% in Babbitt — 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?
• It's been on market 95 days. Have you received any prior offers? Is the seller open to a 25% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1977 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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.
• 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?