540 5th Ave S

Isle, MN 56342

$115,000C-

5 bd · 2.0 ba · 880 sqft · Built 1905 · SingleFamily · Active · 12 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,138/mo
• Mortgage (P&I): −$603
• Tax + insurance: −$160
• HOA: −$0
• Vac / Maint / Mgmt: −$239
• Net cashflow: $136/mo
• Annual: $1,630/yr
• Cap rate: 7.71%
• Cash-on-cash: 5.06%
• DSCR: 1.23
• 1% rule: 0.99%
• Cash to close: $32,200

Investor read

• This is a 5-bed/2.0-bath single-family listed at $115k.
• At list price, monthly cash flow is $136 ($2k/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 $114k (1.0% below list).
• Only 12 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $114k (1.0% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $795 of loan paydown is wiped out by about $3k of value loss. Plan a longer hold.
• Location reads 56/100 on livability (#847 in MN) — a working-class tenant base; expect higher turnover. Strengths: cost of living A+, housing B; Watch: health & safety C-, schools D, crime F.
• Isle Public School District (rural): math 34% / reading 54% proficiency, ranked #341 of 467 in MN (top 73%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1905 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 77 active listings in the ZIP; 163 units permitted in Mille Lacs County in 2024 (66 in 5+ unit buildings).
• Mille Lacs County population projected at -22% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• Current owner paid $28k; list at $115k implies a 318% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.

Questions for listing agent

• Built in 1905 — 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 D-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 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?
• 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.