8937 Ironwood Ave S

Cottage Grove, MN 55016

$175,000C-

2 bd · 1.0 ba · 1,180 sqft · Built 1972 · SingleFamily · Pending · 17 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,028/mo
• Mortgage (P&I): −$918
• Tax + insurance: −$258
• HOA: −$281
• Vac / Maint / Mgmt: −$426
• Net cashflow: $146/mo
• Annual: $1,750/yr
• Cap rate: 7.29%
• Cash-on-cash: 3.57%
• DSCR: 1.16
• 1% rule: 1.16%
• Cash to close: $49,000

Investor read

• This is a 2-bed/1.0-bath single-family listed at $175k.
• At list price, monthly cash flow is $146 ($2k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $175k).
• It's been on market 17 days — a 2% lower offer ($172k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $172k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $5k of value loss. Plan a longer hold.
• Location reads 77/100 on livability (#132 in MN, #2,948 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, employment A+, housing A+; Watch: cost of living C-, amenities F, commute F.
• South Washington County School District (suburban): math 52% / reading 61% proficiency, ranked #40 of 301 in MN (top 13%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease; only 14% free/reduced lunch — higher-income household profile.
• Market conditions: Rents rising (+3.8%/yr); 401 active listings in the ZIP; 2 comparable units currently listed for rent nearby; high-income renter base; 1,405 units permitted in Washington County in 2024 (121 in 5+ unit buildings).
• Washington County population projected at +16% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 sale attempts since 14y 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.
• Current owner paid $75k; list at $175k implies a 133% gain — meaningful room to come down on a strong offer.
• Cap rate 7.3% vs local median 3.4% in Cottage Grove — 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

• Built in 1972 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• 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.