2565 Lockwood Dr #108

Mendota Heights, MN 55120

$239,900C+

2 bd · 2.0 ba · 1,215 sqft · Built 1992 · Townhouse · Active · 55 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,974/mo
• Mortgage (P&I): −$1,258
• Tax + insurance: −$277
• HOA: −$324
• Vac / Maint / Mgmt: −$625
• Net cashflow: $490/mo
• Annual: $5,880/yr
• Cap rate: 8.74%
• Cash-on-cash: 8.75%
• DSCR: 1.39
• 1% rule: 1.24%
• Cash to close: $67,172

Investor read

• This is a 2-bed/2.0-bath townhouse listed at $240k.
• At list price, monthly cash flow is $490 ($6k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $240k).
• It's been on market 55 days — a 3% lower offer ($233k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $233k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $7k of value loss. Plan a longer hold.
• Location reads 84/100 on livability (#26 in MN, #828 nationally) — a professional / high-income tenant draw. Strengths: commute A+, employment A+, housing A+; Watch: amenities F, cost of living F.
• West St. Paul-Mendota Hts.-Eagan (suburban): math 42% / reading 54% proficiency, ranked #125 of 301 in MN (top 42%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: 16 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals leasing fast (median 0d on market — plan ~1-2 weeks tenant-placement turnaround); 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.
• Current owner paid $68k; list at $240k implies a 251% gain — meaningful room to come down on a strong offer.
• Cap rate 8.7% vs local median 1.3% in Mendota Heights — 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 55 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• 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 A-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.