2723 Division St E

Brainerd, MN 56401

$194,900D-

3 bd · 1.0 ba · 1,056 sqft · Built 2003 · SingleFamily · Pending · 33 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,496/mo
• Mortgage (P&I): −$1,022
• Tax + insurance: −$193
• HOA: −$0
• Vac / Maint / Mgmt: −$314
• Net cashflow: $-33/mo
• Annual: $-397/yr
• Cap rate: 6.09%
• Cash-on-cash: -0.73%
• DSCR: 0.97
• 1% rule: 0.77%
• Cash to close: $54,572

Investor read

• This is a 3-bed/1.0-bath single-family listed at $195k.
• At list price, monthly cash flow is $-33 ($-397/yr) — negative.
• To cash-flow at today's rent, offer at most $189k (3.0% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $150k (23.2% below list).
• It's been on market 33 days — a 3% lower offer ($189k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $150k (23.2% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $6k of value loss. Plan a longer hold.
• Location reads 72/100 on livability (#272 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: crime D, amenities F, commute F.
• Brainerd Public School District (town): math 49% / reading 58% proficiency, ranked #85 of 301 in MN (top 28%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Harrison Elementary (math 62% / reading 47%, grade C, #320 of 857 statewide, top 41%, 229 students, 72% FRL); Forestview Middle (math 45% / reading 60%, grade C+, #59 of 258 statewide, top 24%, 1,790 students, 45% FRL); Brainerd Senior High (math 47% / reading 62%, grade C-, #87 of 471 statewide, top 22%, 1,842 students, 35% FRL) — zoned schools average 51% FRL vs 31% district-wide (20 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: 409 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 420 units permitted in Crow Wing County in 2024 (17 in 5+ unit buildings).
• Crow Wing County population projected to shrink 8% 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.
• Cap rate 6.1% vs local median 3.4% in Brainerd — 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

• 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 33 days. Have you received any prior offers? Is the seller open to a 23% concession, seller financing, or rate buy-down credit?
• 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?
• Crime grade is D in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• 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.