15 12th Ave NW

Rochester, MN 55901

$395,900B

3 bd · 3.0 ba · 2,032 sqft · Built 1925 · MultiFamily · Pending · 19 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $9,409/mo
• Mortgage (P&I): −$2,076
• Tax + insurance: −$564
• HOA: −$0
• Vac / Maint / Mgmt: −$1,976
• Net cashflow: $4,793/mo
• Annual: $57,512/yr
• Cap rate: 20.82%
• Cash-on-cash: 51.88%
• DSCR: 3.31
• 1% rule: 2.38%
• Cash to close: $110,852

Investor read

• This is a 3 × 4-bed/3.0-bath units multifamily listed at $396k.
• At list price, monthly cash flow is $5k ($58k/yr) — positive. Per door: $2k/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($9k rent vs $396k).
• It's been on market 19 days — a 2% lower offer ($390k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $390k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $12k of value loss. Plan a longer hold.
• Location reads 92/100 on livability (#1 in MN, #27 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, employment A+.
• Rochester Public School District (urban): math 40% / reading 51% proficiency, ranked #152 of 301 in MN (top 50%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: John Marshall Senior High (math 37% / reading 58%, grade D, #162 of 471 statewide, top 35%, 1,573 students, 43% FRL).
• Watch-outs: built in 1925 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+2.2%/yr); 509 active listings in the ZIP; 16 comparable units currently listed for rent nearby; rentals at typical pace (median 22d on market — plan ~3-4 weeks tenant-placement turnaround); solid renter incomes; 1,267 units permitted in Olmsted County in 2024 (915 in 5+ unit buildings).
• Olmsted County population projected at +16% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Current owner paid $50k; list at $396k implies a 692% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 2.2% rent growth), your $111k cash investment doubles in ~3 years — after that, you're playing with house money.
• Cap rate 20.8% vs local median 3.5% in Rochester — 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.
• At $9,409/mo this rent would consume 119% of the median local household income ($95k/yr) (locally 1651% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1925 — 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 A-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 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.