3156 River Falls Ct NW

Rochester, MN 55901

$275,000D

2 bd · 2.5 ba · 1,620 sqft · Built 2003 · Townhouse · Active · 18 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,481/mo
• Mortgage (P&I): −$1,442
• Tax + insurance: −$390
• HOA: −$240
• Vac / Maint / Mgmt: −$521
• Net cashflow: $-112/mo
• Annual: $-1,345/yr
• Cap rate: 5.80%
• Cash-on-cash: -1.75%
• DSCR: 0.92
• 1% rule: 0.90%
• Cash to close: $77,000

Investor read

• This is a 2-bed/2.5-bath townhouse listed at $275k.
• At list price, monthly cash flow is $-112 ($-1k/yr) — negative.
• To cash-flow at today's rent, offer at most $255k (7.2% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $248k (9.8% below list).
• It's been on market 18 days — a 2% lower offer ($271k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $248k (9.8% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $8k of value loss. Plan a longer hold.
• Location reads 92/100 on livability (#1 in MN, #27 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, employment A+.
• Rochester Public School District (urban): math 40% / reading 51% proficiency, ranked #152 of 301 in MN (top 50%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Sunset Terrace Elementary (math 38% / reading 41%, grade F, #604 of 857 statewide, top 74%, 467 students, 56% FRL); John Adams Middle (math 20% / reading 42%, grade F, #191 of 258 statewide, top 74%, 731 students, 42% FRL); John Marshall Senior High (math 37% / reading 58%, grade D, #162 of 471 statewide, top 35%, 1,573 students, 43% FRL) — zoned schools average 47% FRL vs 31% district-wide (16 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: Rents rising (+2.2%/yr); 507 active listings in the ZIP; 8 comparable units currently listed for rent nearby; rentals at typical pace (median 15d on market — plan ~3-4 weeks tenant-placement turnaround); solid renter incomes; 1,267 units permitted in Olmsted County in 2024 (915 in 5+ unit buildings).
• Olmsted County population projected at +16% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 11 sale attempts since 22y ago; this cycle's ask is 21% above the opening price — seller raised mid-cycle; expect resistance to lowballs.
• Current owner paid $224k; 23% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 5.8% vs local median 3.6% in Rochester — 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.
• This rent runs 31% of the median local income ($95k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

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?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are A-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.
• 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.