18226 Echo Dr

Farmington, MN 55024

$345,000D

3 bd · 2.0 ba · 1,677 sqft · Built 1987 · SingleFamily · Pending · 23 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,569/mo
• Mortgage (P&I): −$1,809
• Tax + insurance: −$441
• HOA: −$0
• Vac / Maint / Mgmt: −$540
• Net cashflow: $-220/mo
• Annual: $-2,641/yr
• Cap rate: 5.53%
• Cash-on-cash: -2.73%
• DSCR: 0.88
• 1% rule: 0.74%
• Cash to close: $96,600

Investor read

• This is a 3-bed/2.0-bath single-family listed at $345k.
• At list price, monthly cash flow is $-220 ($-3k/yr) — negative.
• To cash-flow at today's rent, offer at most $306k (11.3% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $257k (25.5% below list).
• It's been on market 23 days — a 2% lower offer ($340k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $257k (25.5% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $10k of value loss. Plan a longer hold.
• Location reads 75/100 on livability (#203 in MN, #4,269 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, employment A+, housing A+; Watch: amenities F, commute F.
• Farmington Public School District (suburban): math 43% / reading 52% proficiency, ranked #104 of 301 in MN (top 35%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; only 12% free/reduced lunch — higher-income household profile.
• Market conditions: 325 active listings in the ZIP; 5 comparable units currently listed for rent nearby; rentals leasing fast (median 11d on market — plan ~1-2 weeks tenant-placement turnaround); high-income renter base; 2,134 units permitted in Dakota County in 2024 (898 in 5+ unit buildings).
• Dakota County population projected at +11% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 10 sale attempts since 28y 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 $240k; 44% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 5.5% vs local median 3.8% in Farmington — 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

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• 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?
• 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.