1204 2nd Ave NW

Austin, MN 55912

$134,900C-

3 bd · 1.0 ba · 1,232 sqft · Built 1934 · Other · Active · 4 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,312/mo
• Mortgage (P&I): −$707
• Tax + insurance: −$195
• HOA: −$0
• Vac / Maint / Mgmt: −$276
• Net cashflow: $134/mo
• Annual: $1,614/yr
• Cap rate: 7.49%
• Cash-on-cash: 4.27%
• DSCR: 1.19
• 1% rule: 0.97%
• Cash to close: $37,772

Investor read

• This is a 3-bed/1.0-bath other listed at $135k.
• At list price, monthly cash flow is $134 ($2k/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 $131k (2.7% below list).
• Only 4 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $131k (2.7% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $933 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 80/100 on livability (#77 in MN, #1,829 nationally) — a professional / high-income tenant draw. Strengths: cost of living A+, housing A+, health & safety A+; Watch: schools C-, commute F.
• Austin Public School District (town): math 24% / reading 34% proficiency, ranked #267 of 301 in MN (top 89%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Watch-outs: built in 1934 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+11.6%/yr); 188 active listings in the ZIP; 8 comparable units currently listed for rent nearby; rentals lingering (median 44d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 100% of comp listings sitting > 30 days — soft ceiling on asking rent; 53 units permitted in Mower County in 2024 (0 in 5+ unit buildings).
• 7 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 $43k; list at $135k implies a 214% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 8.0% rent growth), your $38k cash investment doubles in ~10 years — after that, you're playing with house money.
• Cap rate 7.5% vs local median 4.5% in Austin — 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 1934 — 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.
• 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.