522 1st St SE

Madelia, MN 56062

$175,000C-

5 bd · 2.0 ba · 1,672 sqft · Built 1950 · SingleFamily · Pending · 9 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,534/mo
• Mortgage (P&I): −$918
• Tax + insurance: −$217
• HOA: −$0
• Vac / Maint / Mgmt: −$322
• Net cashflow: $77/mo
• Annual: $920/yr
• Cap rate: 6.82%
• Cash-on-cash: 1.88%
• DSCR: 1.08
• 1% rule: 0.88%
• Cash to close: $49,000

Investor read

• This is a 5-bed/2.0-bath single-family listed at $175k.
• At list price, monthly cash flow is $77 ($920/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 $153k (12.4% below list).
• Only 9 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $153k (12.4% below list) — sets the bar for 1% rule.
• In year one you build about $9k of equity ($1k loan paydown + $8k appreciation (4.3% local appreciation)).
• Location reads 81/100 on livability (#60 in MN, #1,406 nationally) — a professional / high-income tenant draw. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities F, commute F.
• Madelia Public School District (rural): math 40% / reading 42% proficiency, ranked #215 of 301 in MN (top 71%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1950 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 20 active listings in the ZIP; 4 units permitted in Watonwan County in 2024 (0 in 5+ unit buildings).
• Watonwan County population projected to shrink 10% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 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.
• At projected returns (4.3% appreciation + 3.0% rent growth), your $49k cash investment doubles in ~5 years — after that, you're playing with house money.
• By year 5, paydown + projected appreciation supports a ~$38k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.

Questions for listing agent

• Built in 1950 — 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.
• 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.