401 S 3rd St

Polk City, IA 50226

$139,900C

2 bd · 1.0 ba · 850 sqft · Built 1903 · SingleFamily · Active · 93 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,298/mo
• Mortgage (P&I): −$734
• Tax + insurance: −$213
• HOA: −$0
• Vac / Maint / Mgmt: −$272
• Net cashflow: $78/mo
• Annual: $940/yr
• Cap rate: 6.96%
• Cash-on-cash: 2.40%
• DSCR: 1.11
• 1% rule: 0.93%
• Cash to close: $39,172

Investor read

• This is a 2-bed/1.0-bath single-family listed at $140k.
• At list price, monthly cash flow is $78 ($940/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $130k (7.2% below list).
• It's been on market 93 days — a 9% lower offer ($127k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $127k (9.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $967 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 79/100 on livability (#109 in IA, #2,099 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, employment A+, housing A+; Watch: amenities F, commute F.
• North Polk Community School District (rural): math 87% / reading 84% proficiency, ranked #7 of 289 in IA (top 2%) — strong family-tenant draw, lease renewals of 3-5y typical; only 9% free/reduced lunch — higher-income household profile.
• Zoned schools: North Polk West Elementary School (math 92% / reading 82%, grade A+, #16 of 616 statewide, top 3%, 426 students, 8% FRL); North Polk Middle School (math 85% / reading 87%, grade A+, #8 of 246 statewide, top 3%, 455 students, 10% FRL); North Polk High School (math 88% / reading 89%, grade A, #3 of 336 statewide, top 1%, 647 students, 10% FRL) — zoned schools at 9% FRL track the district average.
• Watch-outs: built in 1903 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 219 active listings in the ZIP; 1 comparable units currently listed for rent nearby; high-income renter base; 2,953 units permitted in Polk County in 2024 (540 in 5+ unit buildings).
• Polk County population projected at +37% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 3 sale attempts since 17y ago; this cycle's ask has dropped $25k (15%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $104k; 35% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 7.0% vs local median 1.4% in Polk City — 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 is only 10% of the median local income ($153k/yr) — well below the 30% rent-burden line; pricing power to push rent on renewal without tenant pushback.

Questions for listing agent

• It's been on market 93 days. Have you received any prior offers? Is the seller open to a 9% concession, seller financing, or rate buy-down credit?
• Built in 1903 — 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 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?
• 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.