507 Cottage St

Merrill, WI 54452

$124,900B

4 bd · 1.0 ba · 1,478 sqft · Built 1900 · SingleFamily · Active · 44 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,585/mo
• Mortgage (P&I): −$655
• Tax + insurance: −$232
• HOA: −$0
• Vac / Maint / Mgmt: −$333
• Net cashflow: $365/mo
• Annual: $4,385/yr
• Cap rate: 9.80%
• Cash-on-cash: 12.54%
• DSCR: 1.56
• 1% rule: 1.27%
• Cash to close: $34,972

Investor read

• This is a 4-bed/1.0-bath single-family listed at $125k.
• At list price, monthly cash flow is $365 ($4k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $125k).
• It's been on market 44 days — a 3% lower offer ($121k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $121k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $864 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 76/100 on livability (#134 in WI, #3,510 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: employment D+, amenities F, commute F.
• Merrill Area School District (town): math 38% / reading 39% proficiency, ranked #180 of 342 in WI (top 53%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Kate Goodrich Elementary (math 52% / reading 42%, grade D-, #319 of 1,041 statewide, top 34%, 375 students, 60% FRL); Prairie River Middle (math 32% / reading 32%, grade F, #232 of 383 statewide, top 64%, 593 students, 42% FRL); Merrill High (math 27% / reading 32%, grade F, #228 of 483 statewide, top 52%, 803 students, 34% FRL).
• Watch-outs: built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 74 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 192 units permitted in Lincoln County in 2024 (41 in 5+ unit buildings).
• Lincoln County population projected at -26% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 2 sale attempts 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.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $35k cash investment doubles in ~10 years — after that, you're playing with house money.
• Cap rate 9.8% vs local median 4.6% in Merrill — 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 44 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• Built in 1900 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.