525 2nd St N

Middle River, MN 56737

$89,900C

3 bd · 1.0 ba · 741 sqft · Built 1935 · SingleFamily · Active · 194 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $892/mo
• Mortgage (P&I): −$471
• Tax + insurance: −$98
• HOA: −$0
• Vac / Maint / Mgmt: −$187
• Net cashflow: $135/mo
• Annual: $1,623/yr
• Cap rate: 8.10%
• Cash-on-cash: 6.45%
• DSCR: 1.29
• 1% rule: 0.99%
• Cash to close: $25,172

Investor read

• This is a 3-bed/1.0-bath single-family listed at $90k.
• At list price, monthly cash flow is $135 ($2k/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 $89k (0.7% below list).
• It's been on market 194 days — a 12% lower offer ($79k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $79k (12.0% below list) — sets the bar for market timing.
• In year one you build about $3k of equity ($622 loan paydown + $3k appreciation (3.0% local appreciation)).
• Location reads 68/100 on livability (#391 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, health & safety A+, housing A; Watch: schools D+, crime D+, employment D.
• Greenbush-Middle River School District (rural): math 55% / reading 60% proficiency, ranked #186 of 467 in MN (top 40%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1935 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 3 active listings in the ZIP; 9 units permitted in Marshall County in 2024 (0 in 5+ unit buildings).
• Marshall County population projected to shrink 8% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 2 sale attempts since 3y 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 $78k; 15% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (3.0% appreciation + 3.0% rent growth), your $25k cash investment doubles in ~5 years — after that, you're playing with house money.
• By year 10, paydown + projected appreciation supports a ~$32k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: major wildfire risk — expect insurance premiums to compound above CPI over the hold.

Questions for listing agent

• It's been on market 194 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1935 — 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?
• Crime grade is D in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• 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.