109 5th Ave SE

Pipestone, MN 56164

$109,000C+

4 bd · 2.0 ba · 1,682 sqft · Built 1920 · SingleFamily · Active · 260 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,107/mo
• Mortgage (P&I): −$572
• Tax + insurance: −$102
• HOA: −$0
• Vac / Maint / Mgmt: −$233
• Net cashflow: $201/mo
• Annual: $2,409/yr
• Cap rate: 8.50%
• Cash-on-cash: 7.89%
• DSCR: 1.35
• 1% rule: 1.02%
• Cash to close: $30,520

Investor read

• This is a 4-bed/2.0-bath single-family listed at $109k.
• At list price, monthly cash flow is $201 ($2k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $109k).
• It's been on market 260 days — a 12% lower offer ($96k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $96k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $754 of loan paydown is wiped out by about $3k of value loss. Plan a longer hold.
• Location reads 72/100 on livability (#268 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: schools D+, employment D, amenities F.
• Pipestone Area School District (town): math 36% / reading 42% proficiency, ranked #233 of 301 in MN (top 77%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1920 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 45 active listings in the ZIP; 8 units permitted in Pipestone County in 2024 (0 in 5+ unit buildings).
• Pipestone County population projected at -16% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 2 sale attempts since 8y ago; this cycle's ask has dropped $20k (16%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $39k; list at $109k implies a 179% gain — meaningful room to come down on a strong offer.
• Cap rate 8.5% vs local median 2.3% in Pipestone — 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 260 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.
• 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.