722 E 3rd St

Fairmont, MN 56031

$120,000C-

3 bd · 2.0 ba · 1,330 sqft · Built 1927 · SingleFamily · Pending · 15 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,164/mo
• Mortgage (P&I): −$629
• Tax + insurance: −$107
• HOA: −$0
• Vac / Maint / Mgmt: −$244
• Net cashflow: $184/mo
• Annual: $2,202/yr
• Cap rate: 8.13%
• Cash-on-cash: 6.55%
• DSCR: 1.29
• 1% rule: 0.97%
• Cash to close: $33,600

Investor read

• This is a 3-bed/2.0-bath single-family listed at $120k.
• At list price, monthly cash flow is $184 ($2k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $116k (3.0% below list).
• It's been on market 15 days — a 2% lower offer ($118k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $116k (3.0% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $830 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 68/100 on livability (#407 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+; Watch: health & safety C-, employment D+, amenities F.
• Fairmont Area School District (town): math 45% / reading 51% proficiency, ranked #148 of 301 in MN (top 49%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1927 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 94 active listings in the ZIP; 19 units permitted in Martin County in 2024 (0 in 5+ unit buildings).
• Martin County population projected at -19% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 3 sale attempts since 11y 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 $72k; list at $120k implies a 66% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: major flood risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 8.1% vs local median 3.4% in Fairmont — 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

• Built in 1927 — 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.
• 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.