357 5th Ave SW

Perham, MN 56573

$119,900B

3 bd · 2.0 ba · 764 sqft · Built 1900 · SingleFamily · Active · 166 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,833/mo
• Mortgage (P&I): −$629
• Tax + insurance: −$314
• HOA: −$0
• Vac / Maint / Mgmt: −$385
• Net cashflow: $505/mo
• Annual: $6,065/yr
• Cap rate: 11.35%
• Cash-on-cash: 18.06%
• DSCR: 1.80
• 1% rule: 1.53%
• Cash to close: $33,572

Investor read

• This is a 3-bed/2.0-bath single-family listed at $120k.
• At list price, monthly cash flow is $505 ($6k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $120k).
• It's been on market 166 days — a 12% lower offer ($106k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $106k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $829 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 70/100 on livability (#328 in MN) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, health & safety A+; Watch: amenities F, commute F, employment F.
• Perham-Dent Public School District (town): math 45% / reading 57% proficiency, ranked #110 of 301 in MN (top 36%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: property tax is 2.6% of price; built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 92 active listings in the ZIP; 140 units permitted in Otter Tail County in 2024 (48 in 5+ unit buildings).
• 6 sale attempts since 14y ago; this cycle's ask has dropped $40k (25%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $34k cash investment doubles in ~7 years — after that, you're playing with house money.
• Cap rate 11.4% vs local median 6.0% in Perham — 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

• It's been on market 166 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1900 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Property tax is high relative to price — has the assessment been appealed recently, and will the sale trigger a re-assessment?
• 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?
• 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.