221 16th St

Heron Lake, MN 56137

$44,900B+

3 bd · 1.0 ba · 1,282 sqft · Built 1910 · SingleFamily · Pending · 87 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,144/mo
• Mortgage (P&I): −$235
• Tax + insurance: −$65
• HOA: −$0
• Vac / Maint / Mgmt: −$240
• Net cashflow: $603/mo
• Annual: $7,237/yr
• Cap rate: 22.41%
• Cash-on-cash: 57.56%
• DSCR: 3.56
• 1% rule: 2.55%
• Cash to close: $12,572

Investor read

• This is a 3-bed/1.0-bath single-family listed at $45k.
• At list price, monthly cash flow is $603 ($7k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $45k).
• It's been on market 87 days — a 6% lower offer ($42k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $42k (6.0% below list) — sets the bar for market timing.
• In year one you build about $2k of equity ($310 loan paydown + $1k appreciation (3.0% local appreciation)).
• Location reads 78/100 on livability (#106 in MN, #2,450 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities F, commute F.
• Heron Lake-Okabena School District (rural): math 35% / reading 45% proficiency, ranked #354 of 467 in MN (top 76%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Heron Lake-Okabena Elementary (math 32% / reading 47%, grade F, #604 of 857 statewide, top 74%, 133 students, 55% FRL); Heron Lake-Okabena Secondary (math 22% / reading 27%, grade F, #383 of 471 statewide, top 88%, 161 students, 52% FRL) — zoned schools average 54% FRL vs 27% district-wide (26 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Watch-outs: built in 1910 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 8 active listings in the ZIP; 4 units permitted in Jackson County in 2024 (0 in 5+ unit buildings).
• Jackson County population projected at -11% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• At projected returns (3.0% appreciation + 3.0% rent growth), your $13k cash investment doubles in ~2 years — after that, you're playing with house money.

Questions for listing agent

• It's been on market 87 days. Have you received any prior offers? Is the seller open to a 6% concession, seller financing, or rate buy-down credit?
• Built in 1910 — 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.