202 5th St SE

Montgomery, MN 56069

$165,000B-

4 bd · 1.0 ba · 1,238 sqft · Built 1928 · SingleFamily · Active · 66 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,888/mo
• Mortgage (P&I): −$865
• Tax + insurance: −$279
• HOA: −$0
• Vac / Maint / Mgmt: −$396
• Net cashflow: $347/mo
• Annual: $4,160/yr
• Cap rate: 8.81%
• Cash-on-cash: 9.00%
• DSCR: 1.40
• 1% rule: 1.14%
• Cash to close: $46,200

Investor read

• This is a 4-bed/1.0-bath single-family listed at $165k.
• At list price, monthly cash flow is $347 ($4k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $165k).
• It's been on market 66 days — a 6% lower offer ($155k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $155k (6.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $5k of value loss. Plan a longer hold.
• Location reads 68/100 on livability (#399 in MN) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities F, commute F, health & safety F.
• Watch-outs: built in 1928 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 80 active listings in the ZIP; 60 units permitted in Le Sueur County in 2024 (0 in 5+ unit buildings).
• Le Sueur County population projected to shrink 8% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 9 sale attempts since 30y ago 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 8.8% vs local median 3.2% in Montgomery — 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 66 days. Have you received any prior offers? Is the seller open to a 6% concession, seller financing, or rate buy-down credit?
• Built in 1928 — 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.