424 Butternut Ln SE

St. Michael, MN 55376

$400,000F

3 bd · 2.0 ba · 1,770 sqft · Built 1988 · SingleFamily · Pending · 3 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,459/mo
• Mortgage (P&I): −$2,098
• Tax + insurance: −$505
• HOA: −$0
• Vac / Maint / Mgmt: −$516
• Net cashflow: $-660/mo
• Annual: $-7,926/yr
• Cap rate: 4.31%
• Cash-on-cash: -7.08%
• DSCR: 0.69
• 1% rule: 0.61%
• Cash to close: $112,000

Investor read

• This is a 3-bed/2.0-bath single-family listed at $400k.
• At list price, monthly cash flow is $-660 ($-8k/yr) — negative.
• To cash-flow at today's rent, offer at most $283k (29.2% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $246k (38.5% below list).
• Only 3 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $246k (38.5% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $12k of value loss. Plan a longer hold.
• Location reads: area grade F — affects rentability + tenant quality, not the cash-flow math above.
• St. Michael-Albertville School District (rural): math 62% / reading 66% proficiency, ranked #17 of 301 in MN (top 6%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease; only 9% free/reduced lunch — higher-income household profile.
• Zoned schools: St. Michael Elementary (math 84% / reading 71%, grade A, #21 of 857 statewide, top 3%, 588 students, 23% FRL); St. Michael-Albertville Middle East (math 57% / reading 65%, grade B+, #24 of 258 statewide, top 9%, 892 students, 18% FRL); St. Michael-Albertville Senior High (math 60% / reading 71%, grade B, #27 of 471 statewide, top 6%, 2,240 students, 17% FRL).
• Market conditions: 356 active listings in the ZIP; 5 comparable units currently listed for rent nearby; rentals leasing fast (median 0d on market — plan ~1-2 weeks tenant-placement turnaround); high-income renter base; 1,260 units permitted in Wright County in 2024 (180 in 5+ unit buildings).
• Wright County population projected at +9% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 4 sale attempts since 25y 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 $212k; list at $400k implies a 89% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: moderate flood risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 4.3% vs local median 3.2% in St. Michael — 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?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• 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.