703 S 3rd St

Ellendale, MN 56026

$289,900D

4 bd · 2.0 ba · 1,820 sqft · Built 1974 · SingleFamily · Active · 80 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,655/mo
• Mortgage (P&I): −$1,520
• Tax + insurance: −$384
• HOA: −$0
• Vac / Maint / Mgmt: −$347
• Net cashflow: $-597/mo
• Annual: $-7,160/yr
• Cap rate: 3.82%
• Cash-on-cash: -8.82%
• DSCR: 0.61
• 1% rule: 0.57%
• Cash to close: $81,172

Investor read

• This is a 4-bed/2.0-bath single-family listed at $290k.
• At list price, monthly cash flow is $-597 ($-7k/yr) — negative.
• To cash-flow at today's rent, offer at most $184k (36.4% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $165k (42.9% below list).
• It's been on market 80 days — a 6% lower offer ($273k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $165k (42.9% below list) — sets the bar for 1% rule.
• In year one you build about $31k of equity ($2k loan paydown + $29k appreciation (10.0% local appreciation)).
• Location reads 66/100 on livability (#496 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+; Watch: crime C-, amenities F, commute F.
• Nrheg School District (rural): math 40% / reading 40% proficiency, ranked #216 of 301 in MN (top 72%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Nrheg Elementary (math 52% / reading 42%, grade D-, #492 of 857 statewide, top 61%, 363 students, 52% FRL); Nrheg Secondary (math 27% / reading 40%, grade F, #329 of 471 statewide, top 70%, 455 students, 42% FRL) — zoned schools average 47% FRL vs 25% district-wide (22 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: 14 active listings in the ZIP; 28 units permitted in Steele County in 2024 (0 in 5+ unit buildings).
• Steele County population projected to shrink 10% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 2 sale attempts 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 $187k; list at $290k implies a 55% gain — meaningful room to come down on a strong offer.
• By year 2, paydown + projected appreciation supports a ~$50k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.

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?
• It's been on market 80 days. Have you received any prior offers? Is the seller open to a 43% concession, seller financing, or rate buy-down credit?
• Built in 1974 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• 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?
• 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.