842 S Prairie Ave

Fairmont, MN 56031

$134,000D+

3 bd · 2.0 ba · 1,759 sqft · Built 1890 · SingleFamily · Pending · 49 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,184/mo
• Mortgage (P&I): −$703
• Tax + insurance: −$211
• HOA: −$0
• Vac / Maint / Mgmt: −$249
• Net cashflow: $22/mo
• Annual: $262/yr
• Cap rate: 6.49%
• Cash-on-cash: 0.70%
• DSCR: 1.03
• 1% rule: 0.88%
• Cash to close: $37,520

Investor read

• This is a 3-bed/2.0-bath single-family listed at $134k.
• At list price, monthly cash flow is $22 ($262/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $118k (11.6% below list).
• It's been on market 49 days — a 3% lower offer ($130k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $118k (11.6% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $926 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 68/100 on livability (#407 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+; Watch: health & safety C-, employment D+, amenities F.
• Fairmont Area School District (town): math 45% / reading 51% proficiency, ranked #148 of 301 in MN (top 49%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1890 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 94 active listings in the ZIP; 19 units permitted in Martin County in 2024 (0 in 5+ unit buildings).
• Martin County population projected at -19% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 8 sale attempts since 18y 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 $90k; 49% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 6.5% vs local median 3.4% in Fairmont — 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 49 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1890 — 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.
• 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.
• 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.