118 4th Ave SE

Elbow Lake, MN 56531

$124,900D+

3 bd · 3.0 ba · 1,004 sqft · Built 1900 · SingleFamily · Pending · 258 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,089/mo
• Mortgage (P&I): −$655
• Tax + insurance: −$235
• HOA: −$0
• Vac / Maint / Mgmt: −$229
• Net cashflow: $-30/mo
• Annual: $-362/yr
• Cap rate: 6.00%
• Cash-on-cash: -1.04%
• DSCR: 0.95
• 1% rule: 0.87%
• Cash to close: $34,972

Investor read

• This is a 3-bed/3.0-bath single-family listed at $125k.
• At list price, monthly cash flow is $-30 ($-362/yr) — negative.
• To cash-flow at today's rent, offer at most $120k (4.3% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $109k (12.8% below list).
• It's been on market 258 days — a 12% lower offer ($110k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $109k (12.8% below list) — sets the bar for 1% rule.
• In year one you build about $7k of equity ($864 loan paydown + $6k appreciation (5.1% local appreciation)).
• Location reads 75/100 on livability (#188 in MN, #4,060 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities F, commute F.
• West Central Area (rural): math 47% / reading 61% proficiency, ranked #80 of 301 in MN (top 27%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 22 active listings in the ZIP; 2 units permitted in Grant County in 2024 (0 in 5+ unit buildings).
• Grant County population projected at -20% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 3 sale attempts since 4y ago; this cycle's ask has dropped $45k (26%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• At projected returns (5.1% appreciation + 3.0% rent growth), your $35k cash investment doubles in ~5 years — after that, you're playing with house money.
• By year 5, paydown + projected appreciation supports a ~$32k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.

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 258 days. Have you received any prior offers? Is the seller open to a 13% concession, seller financing, or rate buy-down credit?
• Built in 1900 — 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 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.