221 N 3rd Ave

Albert Lea, MN 56007

$169,900C+

3 bd · 2.0 ba · 1,990 sqft · Built 1908 · MultiFamily · Active · 98 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,056/mo
• Mortgage (P&I): −$891
• Tax + insurance: −$195
• HOA: −$0
• Vac / Maint / Mgmt: −$432
• Net cashflow: $538/mo
• Annual: $6,456/yr
• Cap rate: 10.09%
• Cash-on-cash: 13.57%
• DSCR: 1.60
• 1% rule: 1.21%
• Cash to close: $47,572

Investor read

• This is a 2 × 3-bed/2.0-bath units multifamily listed at $170k.
• At list price, monthly cash flow is $538 ($6k/yr) — positive. Per door: $269/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $170k).
• It's been on market 98 days — a 9% lower offer ($155k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $155k (9.0% 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 72/100 on livability (#274 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: schools C-, employment D+, amenities F.
• Albert Lea Public School District (town): math 30% / reading 40% proficiency, ranked #258 of 301 in MN (top 86%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1908 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 150 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 16 units permitted in Freeborn County in 2024 (0 in 5+ unit buildings).
• Freeborn County population projected at -11% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 7 sale attempts since 20y 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 $115k; 48% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $48k cash investment doubles in ~9 years — after that, you're playing with house money.
• Cap rate 10.1% vs local median 4.0% in Albert Lea — 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.
• This rent runs 36% of the median local income ($69k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• It's been on market 98 days. Have you received any prior offers? Is the seller open to a 9% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1908 — 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.