120 4th St

Farmington, MN 55024

$274,900C-

4 bd · 3.0 ba · 1,128 sqft · Built 1910 · SingleFamily · Pending · 6 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,394/mo
• Mortgage (P&I): −$1,442
• Tax + insurance: −$396
• HOA: −$0
• Vac / Maint / Mgmt: −$503
• Net cashflow: $54/mo
• Annual: $649/yr
• Cap rate: 6.53%
• Cash-on-cash: 0.84%
• DSCR: 1.04
• 1% rule: 0.87%
• Cash to close: $76,972

Investor read

• This is a 4-bed/3.0-bath single-family listed at $275k.
• At list price, monthly cash flow is $54 ($649/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $239k (12.9% below list).
• Only 6 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $239k (12.9% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $8k of value loss. Plan a longer hold.
• Location reads 75/100 on livability (#203 in MN, #4,269 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, employment A+, housing A+; Watch: amenities F, commute F.
• Farmington Public School District (suburban): math 43% / reading 52% proficiency, ranked #104 of 301 in MN (top 35%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; only 12% free/reduced lunch — higher-income household profile.
• Zoned schools: Riverview Elementary (math 42% / reading 45%, grade F, #569 of 857 statewide, top 67%, 645 students, 18% FRL); Levi P. Dodge Middle School (math 37% / reading 54%, grade D+, #106 of 258 statewide, top 43%, 721 students, 27% FRL); Farmington High School (math 32% / reading 56%, grade F, #210 of 471 statewide, top 44%, 2,201 students, 22% FRL).
• Watch-outs: built in 1910 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 325 active listings in the ZIP; 1 comparable units currently listed for rent nearby; high-income renter base; 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.
• 12 sale attempts since 25y 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 $185k; 49% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 6.5% vs local median 3.7% in Farmington — 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 1910 — 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.