121 18th Ave SW

Watertown, SD 57201

$45,000B+

3 bd · 1.0 ba · 1,216 sqft · Built 1983 · SingleFamily · Pending · 52 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,299/mo
• Mortgage (P&I): −$236
• Tax + insurance: −$75
• HOA: −$395
• Vac / Maint / Mgmt: −$273
• Net cashflow: $320/mo
• Annual: $3,841/yr
• Cap rate: 14.83%
• Cash-on-cash: 30.48%
• DSCR: 2.36
• 1% rule: 2.89%
• Cash to close: $12,600

Investor read

• This is a 3-bed/1.0-bath single-family listed at $45k.
• At list price, monthly cash flow is $320 ($4k/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 52 days — a 3% lower offer ($44k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $44k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $311 of loan paydown is wiped out by about $1k of value loss. Plan a longer hold.
• Location reads 78/100 on livability (#11 in SD, #2,681 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: commute F.
• Watertown School District 14-4 (town): math 45% / reading 57% proficiency, ranked #28 of 59 in SD (top 48%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Watertown Middle School - 02 (math 42% / reading 63%, grade C+, #45 of 143 statewide, top 31%, 600 students, 26% FRL); Watertown High School - 01 (math 42% / reading 67%, grade C-, #53 of 151 statewide, top 41%, 1,220 students, 22% FRL) — zoned schools at 24% FRL track the district average.
• Watch-outs: HOA is 30% of rent.
• Market conditions: 228 active listings in the ZIP; 2 comparable units currently listed for rent nearby; 160 units permitted in Codington County in 2024 (63 in 5+ unit buildings).
• Codington County population projected at +14% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $13k cash investment doubles in ~4 years — after that, you're playing with house money.
• Cap rate 14.8% vs local median 2.3% in Watertown — 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 52 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• 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 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?
• 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.