501 4th St SE

Deer River, MN 56636

$50,000B-

3 bd · 1.0 ba · 1,066 sqft · Built 1910 · SingleFamily · Active · 1 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $897/mo
• Mortgage (P&I): −$262
• Tax + insurance: −$130
• HOA: −$0
• Vac / Maint / Mgmt: −$188
• Net cashflow: $317/mo
• Annual: $3,803/yr
• Cap rate: 13.90%
• Cash-on-cash: 27.16%
• DSCR: 2.21
• 1% rule: 1.79%
• Cash to close: $14,000

Investor read

• This is a 3-bed/1.0-bath single-family listed at $50k.
• At list price, monthly cash flow is $317 ($4k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($897 rent vs $50k).
• Only 1 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $346 of loan paydown is wiped out by about $2k of value loss. Plan a longer hold.
• Location reads 64/100 on livability (#587 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: amenities F, commute F, employment F.
• Deer River Public School District (rural): math 31% / reading 40% proficiency, ranked #256 of 301 in MN (top 85%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: property tax is 2.6% of price; built in 1910 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 58 active listings in the ZIP; 121 units permitted in Itasca County in 2024 (0 in 5+ unit buildings).
• Itasca County population projected to shrink 4% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• Current owner paid $34k; 45% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $14k cash investment doubles in ~5 years — after that, you're playing with house money.
• Climate carrying-cost: moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.

Questions for listing agent

• Built in 1910 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Property tax is high relative to price — has the assessment been appealed recently, and will the sale trigger a re-assessment?
• 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.