305 Summit St SE

Sleepy Eye, MN 56085

$139,900B-

4 bd · 2.0 ba · 1,832 sqft · Built 1922 · SingleFamily · Pending · 26 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,255/mo
• Mortgage (P&I): −$734
• Tax + insurance: −$127
• HOA: −$0
• Vac / Maint / Mgmt: −$264
• Net cashflow: $130/mo
• Annual: $1,563/yr
• Cap rate: 7.41%
• Cash-on-cash: 3.99%
• DSCR: 1.18
• 1% rule: 0.90%
• Cash to close: $39,172

Investor read

• This is a 4-bed/2.0-bath single-family listed at $140k.
• At list price, monthly cash flow is $130 ($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 $125k (10.3% below list).
• It's been on market 26 days — a 2% lower offer ($138k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $125k (10.3% below list) — sets the bar for 1% rule.
• In year one you build about $15k of equity ($967 loan paydown + $14k appreciation (10.0% local appreciation)).
• Location reads 79/100 on livability (#91 in MN, #2,057 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities D-, commute F.
• Sleepy Eye Public School District (town): math 51% / reading 58% proficiency, ranked #232 of 467 in MN (top 50%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1922 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 18 active listings in the ZIP; 41 units permitted in Brown County in 2024 (18 in 5+ unit buildings).
• Brown County population projected at -14% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• At projected returns (10.0% appreciation + 3.0% rent growth), your $39k cash investment doubles in ~3 years — after that, you're playing with house money.
• By year 3, paydown + projected appreciation supports a ~$38k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.

Questions for listing agent

• Built in 1922 — 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 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.
• 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.