704 Prairie Ln SW

Alexandria, MN 56308

$204,000D-

3 bd · 1.0 ba · 672 sqft · Built 1960 · SingleFamily · Pending · 30 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,399/mo
• Mortgage (P&I): −$1,070
• Tax + insurance: −$151
• HOA: −$0
• Vac / Maint / Mgmt: −$294
• Net cashflow: $-116/mo
• Annual: $-1,391/yr
• Cap rate: 5.61%
• Cash-on-cash: -2.43%
• DSCR: 0.89
• 1% rule: 0.69%
• Cash to close: $57,120

Investor read

• This is a 3-bed/1.0-bath single-family listed at $204k.
• At list price, monthly cash flow is $-116 ($-1k/yr) — negative.
• To cash-flow at today's rent, offer at most $184k (10.0% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $140k (31.4% below list).
• It's been on market 30 days — a 2% lower offer ($201k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $140k (31.4% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $6k of value loss. Plan a longer hold.
• Location reads 78/100 on livability (#105 in MN, #2,409 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: amenities D, commute F.
• Alexandria Public School District (town): math 55% / reading 57% proficiency, ranked #64 of 301 in MN (top 21%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Lincoln Elementary (math 67% / reading 57%, grade B, #180 of 857 statewide, top 23%, 466 students, 38% FRL); Discovery Middle School (math 51% / reading 57%, grade B-, #48 of 258 statewide, top 19%, 913 students, 34% FRL); Alexandria Area High School (math 39% / reading 62%, grade D+, #131 of 471 statewide, top 28%, 1,302 students, 26% FRL).
• Market conditions: 412 active listings in the ZIP; solid renter incomes; 285 units permitted in Douglas County in 2024 (88 in 5+ unit buildings).
• Douglas County population projected at +5% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• Current owner paid $65k; list at $204k implies a 214% gain — meaningful room to come down on a strong offer.
• Cap rate 5.6% vs local median 2.5% in Alexandria — 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?
• Built in 1960 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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.