505 E Chestnut St

Redwood Falls, MN 56283

$49,900B-

3 bd · 2.0 ba · 994 sqft · Built 1907 · SingleFamily · Pending · 13 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,210/mo
• Mortgage (P&I): −$262
• Tax + insurance: −$204
• HOA: −$0
• Vac / Maint / Mgmt: −$254
• Net cashflow: $490/mo
• Annual: $5,876/yr
• Cap rate: 18.07%
• Cash-on-cash: 42.05%
• DSCR: 2.87
• 1% rule: 2.42%
• Cash to close: $13,972

Investor read

• This is a 3-bed/2.0-bath single-family listed at $50k.
• At list price, monthly cash flow is $490 ($6k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $50k).
• Only 13 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $345 of loan paydown is wiped out by about $1k of value loss. Plan a longer hold.
• Location reads 76/100 on livability (#169 in MN, #3,642 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: amenities F, commute F.
• Redwood Area School District (town): math 39% / reading 46% proficiency, ranked #207 of 301 in MN (top 69%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: property tax is 4.4% of price; built in 1907 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 46 active listings in the ZIP; 4 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; 25 units permitted in Redwood County in 2024 (0 in 5+ unit buildings).
• Redwood County population projected at -16% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $14k cash investment doubles in ~3 years — after that, you're playing with house money.
• Cap rate 18.1% vs local median 6.0% in Redwood Falls — 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 1907 — 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?
• 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.