1540 S US 59 Hwy S #702

Detroit Lakes, MN 56501

$121,900B-

2 bd · 1.0 ba · 713 sqft · Built 2006 · SingleFamily · Active · 31 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,833/mo
• Mortgage (P&I): −$639
• Tax + insurance: −$203
• HOA: −$125
• Vac / Maint / Mgmt: −$595
• Net cashflow: $1,270/mo
• Annual: $15,244/yr
• Cap rate: 18.80%
• Cash-on-cash: 44.66%
• DSCR: 2.99
• 1% rule: 2.32%
• Cash to close: $34,132

Investor read

• This is a 2-bed/1.0-bath single-family listed at $122k. Condition is rated poor.
• At list price, monthly cash flow is $1k ($15k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $122k).
• It's been on market 31 days — a 3% lower offer ($118k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $118k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $843 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 80/100 on livability (#78 in MN, #1,847 nationally) — a professional / high-income tenant draw. Strengths: housing A+, health & safety A+, cost of living A; Watch: amenities F, commute F.
• Detroit Lakes Public School District (town): math 44% / reading 50% proficiency, ranked #155 of 301 in MN (top 52%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Rossman Elementary (math 64% / reading 55%, grade B-, #216 of 857 statewide, top 29%, 573 students, 40% FRL); Detroit Lakes Middle (math 29% / reading 42%, grade F, #172 of 258 statewide, top 68%, 596 students, 46% FRL); Detroit Lakes Senior High (math 52% / reading 57%, grade C-, #87 of 471 statewide, top 22%, 865 students, 37% FRL).
• Market conditions: 307 active listings in the ZIP; 156 units permitted in Becker County in 2024 (0 in 5+ unit buildings).
• Becker County population projected at +4% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $34k cash investment doubles in ~3 years — after that, you're playing with house money.
• Cap rate 18.8% vs local median 5.2% in Detroit Lakes — 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 31 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are B-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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.

Repairs flagged (vision-AI assessment)

• Major: roof — The roof appears to be missing or in disrepair.
• Major: exterior siding — The siding and paint appear to be peeling and in poor condition.
• Major: interior walls and paint — The overall condition suggests the interior may be in poor shape.
• Major: windows — The overall condition suggests they may be in poor shape.
• Major: foundation and structure — The overall condition suggests it may be in poor shape.
• Major: HVAC and mechanical systems — The overall condition suggests they may be in poor shape.