314 N Fairfax Ave Ave

Sioux Falls, SD 57103-1325

$150,000D-

2 bd · 3.0 ba · 796 sqft · Built 1919 · Other · Active · 31 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,048/mo
• Mortgage (P&I): −$787
• Tax + insurance: −$211
• HOA: −$0
• Vac / Maint / Mgmt: −$220
• Net cashflow: $-169/mo
• Annual: $-2,033/yr
• Cap rate: 4.94%
• Cash-on-cash: -4.84%
• DSCR: 0.78
• 1% rule: 0.70%
• Cash to close: $42,000

Investor read

• This is a 2-bed/3.0-bath other listed at $150k.
• At list price, monthly cash flow is $-169 ($-2k/yr) — negative.
• To cash-flow at today's rent, offer at most $120k (20.0% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $105k (30.1% below list).
• It's been on market 31 days — a 3% lower offer ($146k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $105k (30.1% below list) — sets the bar for 1% rule.
• In year one you build about $6k of equity ($1k loan paydown + $4k appreciation (3.0% local appreciation)).
• Location reads 85/100 on livability (#3 in SD, #610 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, cost of living A+; Watch: crime F.
• Sioux Falls School District 49-5 (urban): math 39% / reading 48% proficiency, ranked #45 of 59 in SD (top 76%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Terry Redlin Elementary - 11 (math 17% / reading 27%, grade F, #228 of 253 statewide, top 92%, 473 students, 77% FRL); Whittier Middle School - 08 (math 14% / reading 26%, grade F, #133 of 143 statewide, top 93%, 704 students, 70% FRL); Washington High School - 01 (math 33% / reading 57%, grade D-, #110 of 151 statewide, top 73%, 1,910 students, 39% FRL) — zoned schools average 62% FRL vs 36% district-wide (26 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Zoned-school proficiency averages 29% at this address vs 44% district-wide (-14 pts) — the specific schools serving this property underperform the Sioux Falls School District 49-5 average; the district grade overstates school quality for this exact location.
• Watch-outs: built in 1919 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 1 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals at typical pace (median 23d on market — plan ~3-4 weeks tenant-placement turnaround); 45% of comp listings sitting > 30 days — soft ceiling on asking rent; 2,425 units permitted in Minnehaha County in 2024 (1,367 in 5+ unit buildings).
• Minnehaha County population projected at +46% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 8 sale attempts since 13y 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 $105k; 43% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• By year 7, paydown + projected appreciation supports a ~$35k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Cap rate 4.9% vs local median 2.6% in Sioux Falls — 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

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• It's been on market 31 days. Have you received any prior offers? Is the seller open to a 30% concession, seller financing, or rate buy-down credit?
• Built in 1919 — 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 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?
• Crime grade is F 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?
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?
• 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.