527 6th Ave NW

Faribault, MN 55021

$349,900C+

6 bd · 4.0 ba · 1,730 sqft · Built 1880 · MultiFamily · Pending · 117 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,026/mo
• Mortgage (P&I): −$1,835
• Tax + insurance: −$363
• HOA: −$0
• Vac / Maint / Mgmt: −$845
• Net cashflow: $982/mo
• Annual: $11,786/yr
• Cap rate: 9.66%
• Cash-on-cash: 12.03%
• DSCR: 1.54
• 1% rule: 1.15%
• Cash to close: $97,972

Investor read

• This is a 3 × 2-bed/1.0-bath units multifamily listed at $350k.
• At list price, monthly cash flow is $982 ($12k/yr) — positive. Per door: $327/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($4k rent vs $350k).
• It's been on market 117 days — a 9% lower offer ($318k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $318k (9.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $10k of value loss. Plan a longer hold.
• Location reads 76/100 on livability (#158 in MN, #3,440 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: schools C-, employment C-, commute F.
• Faribault Public School District (town): math 17% / reading 34% proficiency, ranked #275 of 301 in MN (top 91%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Watch-outs: built in 1880 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 165 active listings in the ZIP; 93 units permitted in Rice County in 2024 (0 in 5+ unit buildings).
• 12 sale attempts since 25y 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.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $98k cash investment doubles in ~10 years — after that, you're playing with house money.
• Cap rate 9.7% vs local median 4.1% in Faribault — 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 $4,026/mo this rent would consume 70% of the median local household income ($69k/yr) (locally 755% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 117 days. Have you received any prior offers? Is the seller open to a 9% concession, seller financing, or rate buy-down credit?
• 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 1880 — 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.
• 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.