3500 1st Ave S

Minneapolis, MN 55408

$774,900D+

12 bd · 4.0 ba · 4,160 sqft · Built 1914 · MultiFamily · Active · 20 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $7,087/mo
• Mortgage (P&I): −$4,064
• Tax + insurance: −$1,265
• HOA: −$0
• Vac / Maint / Mgmt: −$1,488
• Net cashflow: $270/mo
• Annual: $3,242/yr
• Cap rate: 6.71%
• Cash-on-cash: 1.49%
• DSCR: 1.07
• 1% rule: 0.91%
• Cash to close: $216,972

Investor read

• This is a 4 × 3-bed/1.0-bath units multifamily listed at $775k.
• At list price, monthly cash flow is $270 ($3k/yr) — positive. Per door: $68/mo.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $709k (8.5% below list).
• It's been on market 20 days — a 2% lower offer ($763k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $709k (8.5% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $5k of loan paydown is wiped out by about $23k of value loss. Plan a longer hold.
• Location reads 78/100 on livability (#110 in MN, #2,525 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, housing A+; Watch: cost of living C-, crime F.
• Minneapolis Public School District (urban): math 35% / reading 46% proficiency, ranked #217 of 301 in MN (top 72%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Lyndale Elementary (math 42% / reading 52%, grade D-, #492 of 857 statewide, top 61%, 360 students, 74% FRL); Justice Page Middle (math 44% / reading 50%, grade D+, #97 of 258 statewide, top 39%, 925 students, 32% FRL); Washburn High (math 52% / reading 67%, grade C+, #46 of 471 statewide, top 11%, 1,582 students, 37% FRL).
• Watch-outs: built in 1914 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+4.8%/yr); 178 active listings in the ZIP; 4,651 units permitted in Hennepin County in 2024 (2,443 in 5+ unit buildings).
• Hennepin County population projected at +30% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 6 sale attempts since 22y 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 $665k; 17% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Climate carrying-cost: major flood risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.7% vs local median 3.1% in Minneapolis — 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.
• At $7,087/mo this rent would consume 121% of the median local household income ($70k/yr) (locally 2619% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

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 1914 — 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.
• Crime grade is F 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.