421 Buffalo Ave S

Montrose, MN 55363

$174,900C+

2 bd · 1.0 ba · 796 sqft · Built 1900 · SingleFamily · Active · 20 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,816/mo
• Mortgage (P&I): −$917
• Tax + insurance: −$201
• HOA: −$0
• Vac / Maint / Mgmt: −$381
• Net cashflow: $317/mo
• Annual: $3,800/yr
• Cap rate: 8.47%
• Cash-on-cash: 7.76%
• DSCR: 1.35
• 1% rule: 1.04%
• Cash to close: $48,972

Investor read

• This is a 2-bed/1.0-bath single-family listed at $175k.
• At list price, monthly cash flow is $317 ($4k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $175k).
• It's been on market 20 days — a 2% lower offer ($172k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $172k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-2.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 65/100 on livability (#522 in MN) — a middle-class / working-renter tenant base. Strengths: crime A+, housing A+, cost of living A-; Watch: amenities F, commute F, health & safety F.
• Buffalo-Hanover-Montrose Public Schools (town): math 52% / reading 56% proficiency, ranked #63 of 301 in MN (top 21%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease; only 18% free/reduced lunch — higher-income household profile.
• Watch-outs: built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 48 active listings in the ZIP; 1,260 units permitted in Wright County in 2024 (180 in 5+ unit buildings).
• Wright County population projected at +9% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 10 sale attempts since 29y 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.
• Cap rate 8.5% vs local median 3.9% in Montrose — 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 1900 — 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?
• 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.