2120 Valleyhigh Dr NW Unit C206

Rochester, MN 55901

$118,000C-

2 bd · 1.5 ba · 875 sqft · Built 1979 · Condo · Pending · 6 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,413/mo
• Mortgage (P&I): −$619
• Tax + insurance: −$146
• HOA: −$270
• Vac / Maint / Mgmt: −$297
• Net cashflow: $81/mo
• Annual: $971/yr
• Cap rate: 7.12%
• Cash-on-cash: 2.94%
• DSCR: 1.13
• 1% rule: 1.20%
• Cash to close: $33,040

Investor read

• This is a 2-bed/1.5-bath condo listed at $118k.
• At list price, monthly cash flow is $81 ($971/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $118k).
• Only 6 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $816 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 92/100 on livability (#1 in MN, #27 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, employment A+.
• Rochester Public School District (urban): math 40% / reading 51% proficiency, ranked #152 of 301 in MN (top 50%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Sunset Terrace Elementary (math 38% / reading 41%, grade F, #604 of 857 statewide, top 74%, 467 students, 56% FRL); John Marshall Senior High (math 37% / reading 58%, grade D, #162 of 471 statewide, top 35%, 1,573 students, 43% FRL) — zoned schools average 50% FRL vs 31% district-wide (19 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: Rents rising (+2.2%/yr); 509 active listings in the ZIP; 16 comparable units currently listed for rent nearby; rentals at typical pace (median 22d on market — plan ~3-4 weeks tenant-placement turnaround); solid renter incomes; 1,267 units permitted in Olmsted County in 2024 (915 in 5+ unit buildings).
• Olmsted County population projected at +16% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Current owner paid $67k; list at $118k implies a 76% gain — meaningful room to come down on a strong offer.
• Cap rate 7.1% vs local median 3.5% in Rochester — 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.
• This rent is only 18% of the median local income ($95k/yr) — well below the 30% rent-burden line; pricing power to push rent on renewal without tenant pushback.

Questions for listing agent

• Built in 1979 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Any open or pending special assessments — roof, HVAC, plumbing, elevator, façade? What's the per-unit balance and payoff schedule, and is the seller paying it off at close or rolling it to the buyer?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are A-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 apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.