1311 Summit Ave

Detroit Lakes, MN 56501

$950,000B-

12 bd · 2.0 ba · 3,604 sqft · Built 1949 · MultiFamily · Active · 23 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $11,624/mo
• Mortgage (P&I): −$4,982
• Tax + insurance: −$1,111
• HOA: −$0
• Vac / Maint / Mgmt: −$2,441
• Net cashflow: $3,090/mo
• Annual: $37,079/yr
• Cap rate: 10.20%
• Cash-on-cash: 13.94%
• DSCR: 1.62
• 1% rule: 1.22%
• Cash to close: $266,000

Investor read

• This is a 4 × 3-bed/1.8-bath units multifamily listed at $950k.
• At list price, monthly cash flow is $3k ($37k/yr) — positive. Per door: $772/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($12k rent vs $950k).
• It's been on market 23 days — a 2% lower offer ($936k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $936k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $7k of loan paydown is wiped out by about $28k of value loss. Plan a longer hold.
• Location reads 80/100 on livability (#78 in MN, #1,847 nationally) — a professional / high-income tenant draw. Strengths: housing A+, health & safety A+, cost of living A; Watch: amenities F, commute F.
• Detroit Lakes Public School District (town): math 44% / reading 50% proficiency, ranked #155 of 301 in MN (top 52%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1949 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 307 active listings in the ZIP; 156 units permitted in Becker County in 2024 (0 in 5+ unit buildings).
• Becker County population projected at +4% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 4 sale attempts since 7y 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 $625k; list at $950k implies a 52% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $266k cash investment doubles in ~9 years — after that, you're playing with house money.
• Climate carrying-cost: moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 10.2% vs local median 4.7% in Detroit Lakes — 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

• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1949 — 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?
• 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 apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.