234 E School St

Owatonna, MN 55060

$112,700B+

4 bd · 2.0 ba · 1,737 sqft · Built 1885 · SingleFamily · Active · 163 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,797/mo
• Mortgage (P&I): −$591
• Tax + insurance: −$186
• HOA: −$0
• Vac / Maint / Mgmt: −$377
• Net cashflow: $642/mo
• Annual: $7,708/yr
• Cap rate: 13.13%
• Cash-on-cash: 24.43%
• DSCR: 2.09
• 1% rule: 1.59%
• Cash to close: $31,556

Investor read

• This is a 4-bed/2.0-bath single-family listed at $113k.
• At list price, monthly cash flow is $642 ($8k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $113k).
• It's been on market 163 days — a 12% lower offer ($99k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $99k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $779 of loan paydown is wiped out by about $3k of value loss. Plan a longer hold.
• Location reads 76/100 on livability (#155 in MN, #3,413 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, crime A; Watch: amenities D-, commute F, health & safety D-.
• Owatonna Public School District (town): math 38% / reading 47% proficiency, ranked #194 of 301 in MN (top 64%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1885 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 223 active listings in the ZIP; 1 comparable units currently listed for rent nearby; solid renter incomes; 28 units permitted in Steele County in 2024 (0 in 5+ unit buildings).
• Steele County population projected to shrink 10% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 6 sale attempts since 22y ago; this cycle's ask has dropped $43k (28%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $32k cash investment doubles in ~5 years — after that, you're playing with house money.
• Cap rate 13.1% vs local median 3.2% in Owatonna — 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 163 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1885 — 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.
• 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.