4600 W 38th St St

Sioux Falls, SD 57106

$265,000D-

3 bd · 2.0 ba · 1,796 sqft · Built 1963 · SingleFamily · Pending · 22 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,734/mo
• Mortgage (P&I): −$1,390
• Tax + insurance: −$383
• HOA: −$0
• Vac / Maint / Mgmt: −$364
• Net cashflow: $-403/mo
• Annual: $-4,839/yr
• Cap rate: 4.47%
• Cash-on-cash: -6.52%
• DSCR: 0.71
• 1% rule: 0.65%
• Cash to close: $74,200

Investor read

• This is a 3-bed/2.0-bath single-family listed at $265k.
• At list price, monthly cash flow is $-403 ($-5k/yr) — negative.
• To cash-flow at today's rent, offer at most $194k (26.9% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $173k (34.6% below list).
• It's been on market 22 days — a 2% lower offer ($261k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $173k (34.6% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $8k 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: Oscar Howe Elementary - 58 (math 49% / reading 48%, grade D, #132 of 253 statewide, top 52%, 586 students, 42% FRL); Roosevelt High School - 03 (math 40% / reading 60%, grade D+, #67 of 151 statewide, top 45%, 1,713 students, 28% FRL) — zoned schools at 35% FRL track the district average.
• Market conditions: Rents rising (+2.2%/yr); 393 active listings in the ZIP; 11 comparable units currently listed for rent nearby; rentals leasing fast (median 14d on market — plan ~1-2 weeks tenant-placement turnaround); solid renter incomes; 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.
• 2 sale attempts since 7y 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 $195k; 36% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 4.5% 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

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• Built in 1963 — 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?
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?
• 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.