401 Lake Ave S

Balaton, MN 56115

$155,000C+

4 bd · 2.0 ba · 2,184 sqft · Built 1915 · SingleFamily · Pending · 10 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,526/mo
• Mortgage (P&I): −$813
• Tax + insurance: −$167
• HOA: −$0
• Vac / Maint / Mgmt: −$320
• Net cashflow: $226/mo
• Annual: $2,707/yr
• Cap rate: 8.04%
• Cash-on-cash: 6.24%
• DSCR: 1.28
• 1% rule: 0.98%
• Cash to close: $43,400

Investor read

• This is a 4-bed/2.0-bath single-family listed at $155k.
• At list price, monthly cash flow is $226 ($3k/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 $153k (1.6% below list).
• Only 10 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $153k (1.6% below list) — sets the bar for 1% rule.
• In year one you build about $17k of equity ($1k loan paydown + $16k appreciation (10.0% local appreciation)).
• Location reads 66/100 on livability (#477 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: crime D, amenities F, commute F.
• Zoned schools: Tracy Elementary (math 57% / reading 57%, grade C+, #265 of 857 statewide, top 35%, 327 students, 56% FRL); Tracy Secondary (math 42% / reading 57%, grade D, #143 of 471 statewide, top 33%, 330 students, 50% FRL).
• Watch-outs: built in 1915 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 52 active listings in the ZIP; 91 units permitted in Lyon County in 2024 (72 in 5+ unit buildings).
• Lyon County population projected at -12% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• At projected returns (10.0% appreciation + 3.0% rent growth), your $43k cash investment doubles in ~3 years — after that, you're playing with house money.
• By year 3, paydown + projected appreciation supports a ~$42k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.

Questions for listing agent

• Built in 1915 — 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 F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• Crime grade is D 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?
• 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.