521 S Menlo Ave Ave

Sioux Falls, SD 57104

$144,900C-

3 bd · 5.0 ba · 1,187 sqft · Built 1942 · Other · Pending · 23 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,275/mo
• Mortgage (P&I): −$760
• Tax + insurance: −$231
• HOA: −$0
• Vac / Maint / Mgmt: −$268
• Net cashflow: $17/mo
• Annual: $199/yr
• Cap rate: 6.43%
• Cash-on-cash: 0.49%
• DSCR: 1.02
• 1% rule: 0.88%
• Cash to close: $40,572

Investor read

• This is a 3-bed/5.0-bath other listed at $145k.
• At list price, monthly cash flow is $17 ($199/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 $127k (12.0% below list).
• It's been on market 23 days — a 2% lower offer ($143k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $127k (12.0% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 85/100 on livability (#3 in SD, #610 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, cost of living A+; Watch: crime F.
• Sioux Falls School District 49-5 (urban): math 39% / reading 48% proficiency, ranked #45 of 59 in SD (top 76%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Jefferson High School - 67 (1,749 students, 34% FRL) — zoned schools at 34% FRL track the district average.
• Watch-outs: built in 1942 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+7.0%/yr); 153 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals at typical pace (median 21d on market — plan ~3-4 weeks tenant-placement turnaround); 2,425 units permitted in Minnehaha County in 2024 (1,367 in 5+ unit buildings).
• Minnehaha County population projected at +46% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 4 sale attempts 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 $122k; 19% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 6.4% vs local median 2.6% in Sioux 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

• Built in 1942 — 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 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?
• 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.