25 4th Ave SE

Clara City, MN 56222

$265,000B

5 bd · 3.0 ba · 2,670 sqft · Built 1967 · SingleFamily · Pending · 30 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,800/mo
• Mortgage (P&I): −$1,390
• Tax + insurance: −$415
• HOA: −$0
• Vac / Maint / Mgmt: −$798
• Net cashflow: $1,197/mo
• Annual: $14,367/yr
• Cap rate: 11.71%
• Cash-on-cash: 19.36%
• DSCR: 1.86
• 1% rule: 1.43%
• Cash to close: $74,200

Investor read

• This is a 5-bed/3.0-bath single-family listed at $265k.
• At list price, monthly cash flow is $1k ($14k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($4k rent vs $265k).
• It's been on market 30 days — a 2% lower offer ($261k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $261k (1.5% below list) — sets the bar for market timing.
• 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 73/100 on livability (#244 in MN) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities F, commute F, employment D-.
• Maccray School District (rural): math 41% / reading 46% proficiency, ranked #188 of 301 in MN (top 62%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: 7 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 13 units permitted in Chippewa County in 2024 (0 in 5+ unit buildings).
• Chippewa County population projected at -12% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 11 sale attempts since 19y 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 $230k; 15% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $74k cash investment doubles in ~7 years — after that, you're playing with house money.
• Climate carrying-cost: major flood risk — expect insurance premiums to compound above CPI over the hold.

Questions for listing agent

• Built in 1967 — 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.