202 2nd St NW

Climax, MN 56523

$131,000C+

4 bd · 1.0 ba · 1,584 sqft · Built 1920 · SingleFamily · Pending · 134 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,351/mo
• Mortgage (P&I): −$687
• Tax + insurance: −$161
• HOA: −$0
• Vac / Maint / Mgmt: −$284
• Net cashflow: $219/mo
• Annual: $2,633/yr
• Cap rate: 8.30%
• Cash-on-cash: 7.18%
• DSCR: 1.32
• 1% rule: 1.03%
• Cash to close: $36,680

Investor read

• This is a 4-bed/1.0-bath single-family listed at $131k.
• At list price, monthly cash flow is $219 ($3k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $131k).
• It's been on market 134 days — a 12% lower offer ($115k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $115k (12.0% below list) — sets the bar for market timing.
• In year one you build about $6k of equity ($906 loan paydown + $6k appreciation (4.2% local appreciation)).
• Location reads 65/100 on livability (#533 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+; Watch: employment C-, crime D+, health & safety D+.
• Climax-Shelly Public Schools (rural): math 30% / reading 50% proficiency, ranked #362 of 467 in MN (top 78%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Climax Elementary (math 44% / reading 54%, grade D, #423 of 857 statewide, top 55%, 96 students, 66% FRL); Climax Secondary (math 5% / reading 34%, grade F, #421 of 471 statewide, top 90%, 93 students, 56% FRL).
• Watch-outs: built in 1920 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 2 active listings in the ZIP; 42 units permitted in Polk County in 2024 (0 in 5+ unit buildings).
• Polk County population projected to shrink 7% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 2 sale attempts since 10y 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 $20k; list at $131k implies a 558% gain — meaningful room to come down on a strong offer.
• At projected returns (4.2% appreciation + 3.0% rent growth), your $37k cash investment doubles in ~4 years — after that, you're playing with house money.
• By year 6, paydown + projected appreciation supports a ~$34k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.

Questions for listing agent

• It's been on market 134 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1920 — 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.
• Crime grade is D in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• 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.