1524 Pennsylvania Ave

Brainerd, MN 56401

$215,000F

2 bd · 1.0 ba · 1,184 sqft · Built 1940 · SingleFamily · Pending · 14 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,453/mo
• Mortgage (P&I): −$1,127
• Tax + insurance: −$211
• HOA: −$0
• Vac / Maint / Mgmt: −$305
• Net cashflow: $-190/mo
• Annual: $-2,286/yr
• Cap rate: 5.23%
• Cash-on-cash: -3.80%
• DSCR: 0.83
• 1% rule: 0.68%
• Cash to close: $60,200

Investor read

• This is a 2-bed/1.0-bath single-family listed at $215k.
• At list price, monthly cash flow is $-190 ($-2k/yr) — negative.
• To cash-flow at today's rent, offer at most $181k (15.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $145k (32.4% below list).
• Only 14 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $145k (32.4% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $6k of value loss. Plan a longer hold.
• Location reads 72/100 on livability (#272 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: crime D, amenities F, commute F.
• Brainerd Public School District (town): math 49% / reading 58% proficiency, ranked #85 of 301 in MN (top 28%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Riverside Elementary (math 57% / reading 47%, grade C-, #368 of 857 statewide, top 47%, 472 students, 66% FRL); Forestview Middle (math 45% / reading 60%, grade C+, #59 of 258 statewide, top 24%, 1,790 students, 45% FRL); Brainerd Senior High (math 47% / reading 62%, grade C-, #87 of 471 statewide, top 22%, 1,842 students, 35% FRL) — zoned schools average 48% FRL vs 31% district-wide (18 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Watch-outs: built in 1940 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 408 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 420 units permitted in Crow Wing County in 2024 (17 in 5+ unit buildings).
• Crow Wing County population projected to shrink 8% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 5 sale attempts since 17y 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 $186k; 16% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Climate carrying-cost: moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 5.2% vs local median 3.4% in Brainerd — 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

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• Built in 1940 — 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?
• Crime grade is D in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?
• 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.