816 Southern Woods Pl SW

Rochester, MN 55902

$485,000D

4 bd · 3.0 ba · 2,602 sqft · Built 2001 · SingleFamily · Active · 138 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,416/mo
• Mortgage (P&I): −$2,543
• Tax + insurance: −$642
• HOA: −$0
• Vac / Maint / Mgmt: −$717
• Net cashflow: $-486/mo
• Annual: $-5,838/yr
• Cap rate: 5.09%
• Cash-on-cash: -4.30%
• DSCR: 0.81
• 1% rule: 0.70%
• Cash to close: $135,800

Investor read

• This is a 4-bed/3.0-bath single-family listed at $485k.
• At list price, monthly cash flow is $-486 ($-6k/yr) — negative.
• To cash-flow at today's rent, offer at most $399k (17.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $342k (29.6% below list).
• It's been on market 138 days — a 12% lower offer ($427k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $342k (29.6% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $15k of value loss. Plan a longer hold.
• Location reads 92/100 on livability (#1 in MN, #27 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, employment A+.
• Rochester Public School District (urban): math 40% / reading 51% proficiency, ranked #152 of 301 in MN (top 50%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Bamber Valley Elementary (math 48% / reading 53%, grade D+, #412 of 857 statewide, top 48%, 633 students, 26% FRL); Willow Creek Middle (math 19% / reading 36%, grade F, #213 of 258 statewide, top 82%, 890 students, 45% FRL); Mayo Senior High (math 42% / reading 65%, grade C-, #104 of 471 statewide, top 22%, 1,862 students, 31% FRL) — zoned schools at 34% FRL track the district average.
• Market conditions: Rents rising (+1.6%/yr); 393 active listings in the ZIP; 2 comparable units currently listed for rent nearby; high-income renter base; 1,267 units permitted in Olmsted County in 2024 (915 in 5+ unit buildings).
• Olmsted County population projected at +16% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 sale attempts since 2y ago; this cycle's ask has dropped $65k (12%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $45k; list at $485k implies a 980% gain — meaningful room to come down on a strong offer.
• Cap rate 5.1% vs local median 3.6% in Rochester — 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.
• This rent runs 34% of the median local income ($121k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

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?
• It's been on market 138 days. Have you received any prior offers? Is the seller open to a 30% concession, seller financing, or rate buy-down credit?
• 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 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?
• 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.