407 S Minnesota St

Redwood Falls, MN 56283

$164,500B

4 bd · 2.0 ba · 1,894 sqft · Built 1917 · SingleFamily · Active · 361 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,065/mo
• Mortgage (P&I): −$863
• Tax + insurance: −$139
• HOA: −$0
• Vac / Maint / Mgmt: −$434
• Net cashflow: $629/mo
• Annual: $7,550/yr
• Cap rate: 10.88%
• Cash-on-cash: 16.39%
• DSCR: 1.73
• 1% rule: 1.26%
• Cash to close: $46,060

Investor read

• This is a 4-bed/2.0-bath single-family listed at $164k.
• At list price, monthly cash flow is $629 ($8k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $164k).
• It's been on market 361 days — a 12% lower offer ($145k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $145k (12.0% 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 76/100 on livability (#169 in MN, #3,642 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: amenities F, commute F.
• Redwood Area School District (town): math 39% / reading 46% proficiency, ranked #207 of 301 in MN (top 69%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Reede Gray Elementary (math 57% / reading 42%, grade D, #423 of 857 statewide, top 55%, 419 students, 52% FRL); Redwood Valley Middle (math 34% / reading 46%, grade F, #147 of 258 statewide, top 57%, 322 students, 55% FRL); Redwood Valley Senior High (math 27% / reading 52%, grade F, #246 of 471 statewide, top 59%, 371 students, 42% FRL) — zoned schools average 50% FRL vs 31% district-wide (18 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Watch-outs: built in 1917 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 47 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 100% of comp listings sitting > 30 days — soft ceiling on asking rent; 25 units permitted in Redwood County in 2024 (0 in 5+ unit buildings).
• Redwood County population projected at -16% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• Current owner paid $72k; list at $164k implies a 127% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $46k cash investment doubles in ~8 years — after that, you're playing with house money.
• Cap rate 10.9% vs local median 5.9% in Redwood 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

• It's been on market 361 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1917 — 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.
• 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.