237 2nd St SW

Richmond, MN 56368

$124,000B

4 bd · 2.0 ba · 1,422 sqft · Built 1914 · SingleFamily · Active · 43 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,153/mo
• Mortgage (P&I): −$650
• Tax + insurance: −$199
• HOA: −$0
• Vac / Maint / Mgmt: −$452
• Net cashflow: $851/mo
• Annual: $10,217/yr
• Cap rate: 14.53%
• Cash-on-cash: 29.43%
• DSCR: 2.31
• 1% rule: 1.74%
• Cash to close: $34,720

Investor read

• This is a 4-bed/2.0-bath single-family listed at $124k.
• At list price, monthly cash flow is $851 ($10k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $124k).
• It's been on market 43 days — a 3% lower offer ($120k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $120k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $857 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 72/100 on livability (#282 in MN) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: health & safety D+, amenities F, commute F.
• Rocori Public School District (town): math 51% / reading 57% proficiency, ranked #68 of 301 in MN (top 23%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease; only 20% free/reduced lunch — higher-income household profile.
• Watch-outs: built in 1914 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 60 active listings in the ZIP; 661 units permitted in Stearns County in 2024 (291 in 5+ unit buildings).
• Stearns County population projected at +9% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 2 sale attempts since 10y 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 $99k; 25% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $35k cash investment doubles in ~5 years — after that, you're playing with house money.
• Cap rate 14.5% vs local median 2.8% in Richmond — 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 43 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• Built in 1914 — 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 A-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.