28 Hemlock Cir

Babbitt, MN 55706

$72,000B

2 bd · 2.0 ba · 884 sqft · Built 1954 · SingleFamily · Active · 178 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $859/mo
• Mortgage (P&I): −$378
• Tax + insurance: −$47
• HOA: −$0
• Vac / Maint / Mgmt: −$180
• Net cashflow: $255/mo
• Annual: $3,055/yr
• Cap rate: 10.54%
• Cash-on-cash: 15.15%
• DSCR: 1.67
• 1% rule: 1.19%
• Cash to close: $20,160

Investor read

• This is a 2-bed/2.0-bath single-family listed at $72k.
• At list price, monthly cash flow is $255 ($3k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($859 rent vs $72k).
• It's been on market 178 days — a 12% lower offer ($63k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $63k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $498 of loan paydown is wiped out by about $2k of value loss. Plan a longer hold.
• Location reads 76/100 on livability (#156 in MN, #3,426 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: schools C-, employment C-, amenities F.
• St. Louis County School District (rural): math 34% / reading 49% proficiency, ranked #212 of 301 in MN (top 70%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1954 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 23 active listings in the ZIP; 639 units permitted in St. Louis County in 2024 (338 in 5+ unit buildings).
• 7 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 $42k; list at $72k implies a 71% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $20k cash investment doubles in ~8 years — after that, you're playing with house money.
• Climate carrying-cost: moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 10.5% vs local median 2.4% in Babbitt — 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

• It's been on market 178 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1954 — 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.
• 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.