225 Main St W

Melrose, MN 56352

$169,000C+

3 bd · 1.0 ba · 1,170 sqft · Built 1908 · SingleFamily · Pending · 6 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,730/mo
• Mortgage (P&I): −$886
• Tax + insurance: −$210
• HOA: −$0
• Vac / Maint / Mgmt: −$363
• Net cashflow: $271/mo
• Annual: $3,250/yr
• Cap rate: 8.22%
• Cash-on-cash: 6.87%
• DSCR: 1.31
• 1% rule: 1.02%
• Cash to close: $47,320

Investor read

• This is a 3-bed/1.0-bath single-family listed at $169k.
• At list price, monthly cash flow is $271 ($3k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $169k).
• Only 6 days on market — expect competitive offers; lowballing is unlikely to land.
• In year one you build about $18k of equity ($1k loan paydown + $17k appreciation (10.0% local appreciation)).
• Location reads 76/100 on livability (#164 in MN, #3,568 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities F, commute F.
• Melrose Public School District (rural): math 45% / reading 50% proficiency, ranked #142 of 301 in MN (top 47%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1908 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 31 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 661 units permitted in Stearns County in 2024 (291 in 5+ unit buildings).
• Stearns County population projected at +9% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 2 sale attempts since 23y 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 $110k; list at $169k implies a 54% gain — meaningful room to come down on a strong offer.
• At projected returns (10.0% appreciation + 3.0% rent growth), your $47k cash investment doubles in ~3 years — after that, you're playing with house money.
• By year 3, paydown + projected appreciation supports a ~$46k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.

Questions for listing agent

• Built in 1908 — 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.