523 N 1st Ave Ave E #521

Duluth, MN 55805

$229,000B

4 bd · 2.0 ba · 2,208 sqft · Built 1896 · MultiFamily · Active · 136 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,568/mo
• Mortgage (P&I): −$1,201
• Tax + insurance: −$382
• HOA: −$0
• Vac / Maint / Mgmt: −$749
• Net cashflow: $1,236/mo
• Annual: $14,834/yr
• Cap rate: 12.77%
• Cash-on-cash: 23.13%
• DSCR: 2.03
• 1% rule: 1.56%
• Cash to close: $64,120

Investor read

• This is a 2 × 2-bed/1.0-bath units multifamily listed at $229k. Condition is rated fair.
• At list price, monthly cash flow is $1k ($15k/yr) — positive. Per door: $618/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($4k rent vs $229k).
• It's been on market 136 days — a 12% lower offer ($202k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $202k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $7k of value loss. Plan a longer hold.
• Location reads 82/100 on livability (#36 in MN, #1,060 nationally) — a professional / high-income tenant draw. Strengths: commute A+, cost of living A+, housing A+; Watch: amenities F.
• Duluth Public School District (urban): math 44% / reading 55% proficiency, ranked #132 of 301 in MN (top 44%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Myers-Wilkins Elementary (math 17% / reading 37%, grade F, #703 of 857 statewide, top 84%, 341 students, 88% FRL); Lincoln Park Middle School (math 26% / reading 39%, grade F, #186 of 258 statewide, top 72%, 524 students, 66% FRL); Denfeld High School (math 32% / reading 42%, grade F, #282 of 471 statewide, top 63%, 940 students, 56% FRL) — zoned schools average 70% FRL vs 39% district-wide (31 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Zoned-school proficiency averages 32% at this address vs 50% district-wide (-17 pts) — the specific schools serving this property underperform the Duluth Public School District average; the district grade overstates school quality for this exact location.
• Watch-outs: built in 1896 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+4.3%/yr); 41 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals at typical pace (median 23d on market — plan ~3-4 weeks tenant-placement turnaround); lower-income renter base — watch delinquency; 639 units permitted in St. Louis County in 2024 (338 in 5+ unit buildings).
• At projected returns (-3.0% appreciation + 4.3% rent growth), your $64k cash investment doubles in ~5 years — after that, you're playing with house money.
• Cap rate 12.8% vs local median 4.9% in Duluth — 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.
• At $3,568/mo this rent would consume 99% of the median local household income ($43k/yr) (locally 927% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 136 days. Have you received any prior offers? Is the seller open to a 12% 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?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• Built in 1896 — 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.
• 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?

Repairs flagged (vision-AI assessment)

• Major: Exterior siding — Weathered and in need of repair.
• Major: Roof — Missing shingles or damage.
• Major: Landscaping — Overgrown and in need of maintenance.