106 8th Ave SW

Pipestone, MN 56164

$134,500D

3 bd · 2.0 ba · 1,366 sqft · Built 1948 · SingleFamily · Pending · 112 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $981/mo
• Mortgage (P&I): −$705
• Tax + insurance: −$163
• HOA: −$0
• Vac / Maint / Mgmt: −$206
• Net cashflow: $-94/mo
• Annual: $-1,127/yr
• Cap rate: 5.45%
• Cash-on-cash: -2.99%
• DSCR: 0.87
• 1% rule: 0.73%
• Cash to close: $37,660

Investor read

• This is a 3-bed/2.0-bath single-family listed at $134k.
• At list price, monthly cash flow is $-94 ($-1k/yr) — negative.
• To cash-flow at today's rent, offer at most $118k (12.3% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $98k (27.1% below list).
• It's been on market 112 days — a 9% lower offer ($122k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $98k (27.1% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $930 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 72/100 on livability (#268 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: schools D+, employment D, amenities F.
• Pipestone Area School District (town): math 36% / reading 42% proficiency, ranked #233 of 301 in MN (top 77%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1948 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 45 active listings in the ZIP; 8 units permitted in Pipestone County in 2024 (0 in 5+ unit buildings).
• Pipestone County population projected at -16% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 4 sale attempts since 9y ago; this cycle's ask has dropped $24k (15%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $105k; 28% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 5.5% vs local median 2.3% in Pipestone — 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 112 days. Have you received any prior offers? Is the seller open to a 27% concession, seller financing, or rate buy-down credit?
• Built in 1948 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.