106 7th Ave

Defiance, IA 51527

$135,000C+

4 bd · 2.0 ba · 1,568 sqft · Built 1880 · SingleFamily · Pending · 7 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,251/mo
• Mortgage (P&I): −$708
• Tax + insurance: −$194
• HOA: −$0
• Vac / Maint / Mgmt: −$263
• Net cashflow: $86/mo
• Annual: $1,032/yr
• Cap rate: 7.06%
• Cash-on-cash: 2.73%
• DSCR: 1.12
• 1% rule: 0.93%
• Cash to close: $37,800

Investor read

• This is a 4-bed/2.0-bath single-family listed at $135k.
• At list price, monthly cash flow is $86 ($1k/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 $125k (7.3% below list).
• Only 7 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $125k (7.3% below list) — sets the bar for 1% rule.
• In year one you build about $3k of equity ($933 loan paydown + $2k appreciation (1.8% local appreciation)).
• Location reads 58/100 on livability (#890 in IA) — a working-class tenant base; expect higher turnover. Strengths: cost of living A+, housing B+; Watch: employment D, schools F, amenities F.
• Harlan Community School District (town): math 72% / reading 77% proficiency, ranked #81 of 289 in IA (top 28%) — strong family-tenant draw, lease renewals of 3-5y typical.
• Watch-outs: built in 1880 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 2 active listings in the ZIP; 8 units permitted in Shelby County in 2024 (0 in 5+ unit buildings).
• Shelby County population projected to shrink 7% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 3 sale attempts since 27y 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 $117k; 15% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (1.8% appreciation + 3.0% rent growth), your $38k cash investment doubles in ~7 years — after that, you're playing with house money.
• By year 10, paydown + projected appreciation supports a ~$33k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.

Questions for listing agent

• Built in 1880 — 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 F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.