400 2nd Ave SE

Wells, MN 56097

$109,500C

3 bd · 1.0 ba · 1,256 sqft · Built 1880 · SingleFamily · Pending · 8 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,161/mo
• Mortgage (P&I): −$574
• Tax + insurance: −$150
• HOA: −$0
• Vac / Maint / Mgmt: −$244
• Net cashflow: $192/mo
• Annual: $2,310/yr
• Cap rate: 8.40%
• Cash-on-cash: 7.53%
• DSCR: 1.34
• 1% rule: 1.06%
• Cash to close: $30,660

Investor read

• This is a 3-bed/1.0-bath single-family listed at $110k.
• At list price, monthly cash flow is $192 ($2k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $110k).
• Only 8 days on market — expect competitive offers; lowballing is unlikely to land.
• In year one you build about $12k of equity ($757 loan paydown + $11k appreciation (10.0% local appreciation)).
• Location reads 76/100 on livability (#149 in MN, #3,328 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, health & safety A+, crime A; Watch: amenities D, employment D, commute F.
• United South Central School District (rural): math 46% / reading 53% proficiency, ranked #130 of 301 in MN (top 43%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1880 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 28 active listings in the ZIP; 4 units permitted in Faribault County in 2024 (0 in 5+ unit buildings).
• Faribault County population projected at -11% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 5 sale attempts since 16y 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.
• At projected returns (10.0% appreciation + 3.0% rent growth), your $31k cash investment doubles in ~3 years — after that, you're playing with house money.
• By year 4, paydown + projected appreciation supports a ~$42k 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.
• 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.