718 6th St NW

Faribault, MN 55021

$279,900D

4 bd · 2.0 ba · 2,514 sqft · Built 1900 · SingleFamily · Active · 232 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,132/mo
• Mortgage (P&I): −$1,468
• Tax + insurance: −$373
• HOA: −$0
• Vac / Maint / Mgmt: −$448
• Net cashflow: $-157/mo
• Annual: $-1,888/yr
• Cap rate: 5.62%
• Cash-on-cash: -2.41%
• DSCR: 0.89
• 1% rule: 0.76%
• Cash to close: $78,372

Investor read

• This is a 4-bed/2.0-bath single-family listed at $280k.
• At list price, monthly cash flow is $-157 ($-2k/yr) — negative.
• To cash-flow at today's rent, offer at most $252k (9.9% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $213k (23.8% below list).
• It's been on market 232 days — a 12% lower offer ($246k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $213k (23.8% 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 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; 93 units permitted in Rice County in 2024 (0 in 5+ unit buildings).
• 5 sale attempts since 16y ago; this cycle's ask has dropped $20k (7%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Cap rate 5.6% 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.
• This rent runs 37% of the median local income ($69k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

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 232 days. Have you received any prior offers? Is the seller open to a 24% concession, seller financing, or rate buy-down credit?
• Built in 1900 — 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?
• 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.