815 2nd Ave SW

Pine City, MN 55063

$239,000D

3 bd · 2.0 ba · 1,320 sqft · Built 1919 · SingleFamily · Pending · 60 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,083/mo
• Mortgage (P&I): −$1,253
• Tax + insurance: −$291
• HOA: −$0
• Vac / Maint / Mgmt: −$227
• Net cashflow: $-689/mo
• Annual: $-8,268/yr
• Cap rate: 2.83%
• Cash-on-cash: -12.36%
• DSCR: 0.45
• 1% rule: 0.45%
• Cash to close: $66,920

Investor read

• This is a 3-bed/2.0-bath single-family listed at $239k.
• At list price, monthly cash flow is $-689 ($-8k/yr) — negative.
• To cash-flow at today's rent, offer at most $117k (50.9% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $108k (54.7% below list).
• It's been on market 60 days — a 3% lower offer ($232k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $108k (54.7% below list) — sets the bar for 1% rule.
• In year one you build about $26k of equity ($2k loan paydown + $24k appreciation (10.0% local appreciation)).
• Location reads 69/100 on livability (#370 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: schools D+, amenities F, commute F.
• Pine City Public School District (town): math 34% / reading 47% proficiency, ranked #222 of 301 in MN (top 74%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1919 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 100 active listings in the ZIP; 116 units permitted in Pine County in 2024 (0 in 5+ unit buildings).
• Pine County population projected at -24% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• Current owner paid $165k; 45% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• By year 2, paydown + projected appreciation supports a ~$41k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Cap rate 2.8% vs local median 1.5% in Pine City — 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

• 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 60 days. Have you received any prior offers? Is the seller open to a 55% concession, seller financing, or rate buy-down credit?
• Built in 1919 — 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 D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.