311 3rd Ave NW

Perham, MN 56573

$205,000B

3 bd · 1.0 ba · 1,440 sqft · Built 1947 · SingleFamily · Pending · 22 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,125/mo
• Mortgage (P&I): −$1,075
• Tax + insurance: −$212
• HOA: −$0
• Vac / Maint / Mgmt: −$656
• Net cashflow: $1,182/mo
• Annual: $14,185/yr
• Cap rate: 13.21%
• Cash-on-cash: 24.71%
• DSCR: 2.10
• 1% rule: 1.52%
• Cash to close: $57,400

Investor read

• This is a 3-bed/1.0-bath single-family listed at $205k.
• At list price, monthly cash flow is $1k ($14k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $205k).
• It's been on market 22 days — a 2% lower offer ($202k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $202k (1.5% below list) — sets the bar for market timing.
• 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 70/100 on livability (#328 in MN) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, health & safety A+; Watch: amenities F, commute F, employment F.
• Perham-Dent Public School District (town): math 45% / reading 57% proficiency, ranked #110 of 301 in MN (top 36%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1947 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 93 active listings in the ZIP; 2 comparable units currently listed for rent nearby; 140 units permitted in Otter Tail County in 2024 (48 in 5+ unit buildings).
• 3 sale attempts since 7y 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 $124k; list at $205k implies a 66% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $57k cash investment doubles in ~5 years — after that, you're playing with house money.
• Cap rate 13.2% vs local median 5.8% in Perham — 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

• Built in 1947 — 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?
• 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.