501 Prospect St

Milroy, MN 56263

$144,000D

3 bd · 2.0 ba · 1,265 sqft · Built 2000 · SingleFamily · Coming Soon · 13 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,164/mo
• Mortgage (P&I): −$755
• Tax + insurance: −$237
• HOA: −$0
• Vac / Maint / Mgmt: −$244
• Net cashflow: $-73/mo
• Annual: $-875/yr
• Cap rate: 5.69%
• Cash-on-cash: -2.17%
• DSCR: 0.90
• 1% rule: 0.81%
• Cash to close: $40,320

Investor read

• This is a 3-bed/2.0-bath single-family listed at $144k.
• At list price, monthly cash flow is $-73 ($-875/yr) — negative.
• To cash-flow at today's rent, offer at most $131k (8.9% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $116k (19.2% below list).
• Only 13 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $116k (19.2% below list) — sets the bar for 1% rule.
• In year one you build about $5k of equity ($996 loan paydown + $4k appreciation (3.0% local appreciation)).
• Location reads 67/100 on livability (#449 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+; Watch: crime D+, health & safety D+, amenities F.
• Milroy Public School District (rural): math 40% / reading 40% proficiency, ranked #352 of 467 in MN (top 75%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Milroy Elementary (math 50% / reading 50%, grade D, #423 of 857 statewide, top 55%, 32 students, 50% FRL) — zoned schools average 50% FRL vs 27% district-wide (23 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: 7 active listings in the ZIP; 25 units permitted in Redwood County in 2024 (0 in 5+ unit buildings).
• Redwood County population projected at -16% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• Current owner paid $82k; list at $144k implies a 76% gain — meaningful room to come down on a strong offer.
• At projected returns (3.0% appreciation + 3.0% rent growth), your $40k cash investment doubles in ~7 years — after that, you're playing with house money.
• By year 7, paydown + projected appreciation supports a ~$34k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.

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?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Crime grade is D 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.
• 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.