4254 39 1/2 Ave S

Fargo, ND 58104

$289,000D+

3 bd · 2.0 ba · 984 sqft · Built 2002 · MultiFamily · Pending · 16 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,676/mo
• Mortgage (P&I): −$1,516
• Tax + insurance: −$410
• HOA: −$0
• Vac / Maint / Mgmt: −$562
• Net cashflow: $189/mo
• Annual: $2,264/yr
• Cap rate: 7.08%
• Cash-on-cash: 2.80%
• DSCR: 1.12
• 1% rule: 0.93%
• Cash to close: $80,920

Investor read

• This is a 3-bed/2.0-bath multifamily listed at $289k.
• At list price, monthly cash flow is $189 ($2k/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 $268k (7.4% below list).
• It's been on market 16 days — a 2% lower offer ($285k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $268k (7.4% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $9k of value loss. Plan a longer hold.
• Location reads 85/100 on livability (#1 in ND, #605 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, cost of living A+; Watch: crime F.
• Fargo 1 (urban): math 41% / reading 44% proficiency, ranked #28 of 53 in ND (top 53%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Kennedy Elementary School (math 47% / reading 37%, grade F, #118 of 236 statewide, top 54%, 452 students, 33% FRL); Discovery Middle School (math 49% / reading 55%, grade C+, #3 of 35 statewide, top 12%, 975 students, 26% FRL); Fargo Davies High School (math 34% / reading 45%, grade F, #57 of 144 statewide, top 48%, 1,363 students, 19% FRL) — zoned schools at 26% FRL track the district average.
• Market conditions: Rents rising fast (+5.1%/yr); 369 active listings in the ZIP; 39 comparable units currently listed for rent nearby; rentals at typical pace (median 15d on market — plan ~3-4 weeks tenant-placement turnaround); solid renter incomes; 1,218 units permitted in Cass County in 2024 (410 in 5+ unit buildings).
• Cass County population projected at +69% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 4 sale attempts since 11y 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 7.1% vs local median 2.5% in Fargo — 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 runs 37% of the median local income ($86k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Crime grade is F 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.
• How much new apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.