114 1st Avenue Ave

Ormsby, MN 56162

$39,900B+

1 bd · 1.0 ba · 636 sqft · Built 1953 · SingleFamily · Pending · 128 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $779/mo
• Mortgage (P&I): −$209
• Tax + insurance: −$58
• HOA: −$0
• Vac / Maint / Mgmt: −$164
• Net cashflow: $349/mo
• Annual: $4,185/yr
• Cap rate: 16.78%
• Cash-on-cash: 37.46%
• DSCR: 2.67
• 1% rule: 1.95%
• Cash to close: $11,172

Investor read

• This is a 1-bed/1.0-bath single-family listed at $40k.
• At list price, monthly cash flow is $349 ($4k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($779 rent vs $40k).
• It's been on market 128 days — a 12% lower offer ($35k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $35k (12.0% below list) — sets the bar for market timing.
• In year one you build about $2k of equity ($276 loan paydown + $1k appreciation (3.6% local appreciation)).
• Location reads 50/100 on livability (#887 in MN) — a working-class tenant base; expect higher turnover. Strengths: cost of living A+, crime A; Watch: schools D+, health & safety D+, amenities F.
• St. James Public School District (town): math 36% / reading 43% proficiency, ranked #226 of 301 in MN (top 75%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1953 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 2 active listings in the ZIP; 4 units permitted in Watonwan County in 2024 (0 in 5+ unit buildings).
• Watonwan County population projected to shrink 10% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• Current owner paid $8k; list at $40k implies a 369% gain — meaningful room to come down on a strong offer.
• At projected returns (3.6% appreciation + 3.0% rent growth), your $11k cash investment doubles in ~2 years — after that, you're playing with house money.

Questions for listing agent

• It's been on market 128 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1953 — 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.
• Schools are D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.