502 S Lee Ave Ave

Madison, SD 57042

$179,900D-

4 bd · 2.0 ba · 1,638 sqft · Built 1960 · Other · Pending · 53 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,473/mo
• Mortgage (P&I): −$943
• Tax + insurance: −$285
• HOA: −$0
• Vac / Maint / Mgmt: −$309
• Net cashflow: $-65/mo
• Annual: $-781/yr
• Cap rate: 5.86%
• Cash-on-cash: -1.55%
• DSCR: 0.93
• 1% rule: 0.82%
• Cash to close: $50,372

Investor read

• This is a 4-bed/2.0-bath other listed at $180k.
• At list price, monthly cash flow is $-65 ($-781/yr) — negative.
• To cash-flow at today's rent, offer at most $168k (6.4% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $147k (18.1% below list).
• It's been on market 53 days — a 3% lower offer ($175k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $147k (18.1% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $5k of value loss. Plan a longer hold.
• Location reads 75/100 on livability (#26 in SD, #3,922 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities F, commute F, health & safety F.
• Madison Central School District 39-2 (town): math 41% / reading 55% proficiency, ranked #36 of 59 in SD (top 61%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Madison Elementary - 07 (math 48% / reading 55%, grade C-, #109 of 253 statewide, top 43%, 508 students, 24% FRL); Madison Middle School - 02 (math 36% / reading 51%, grade D, #89 of 143 statewide, top 63%, 257 students, 20% FRL); Madison High School - 01 (math 37% / reading 72%, grade C-, #53 of 151 statewide, top 41%, 382 students, 16% FRL) — zoned schools at 20% FRL track the district average.
• Market conditions: 131 active listings in the ZIP; 35 units permitted in Lake County in 2024 (0 in 5+ unit buildings).
• Lake County population projected at +32% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 3 sale attempts since 17y 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 5.9% vs local median 2.8% in Madison — 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?
• It's been on market 53 days. Have you received any prior offers? Is the seller open to a 18% concession, seller financing, or rate buy-down credit?
• Built in 1960 — 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?
• 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.