428 N Gorman St

Blue Earth, MN 56013

$154,500D-

2 bd · 1.0 ba · 1,302 sqft · Built 1880 · SingleFamily · Active · 26 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,083/mo
• Mortgage (P&I): −$810
• Tax + insurance: −$139
• HOA: −$0
• Vac / Maint / Mgmt: −$227
• Net cashflow: $-94/mo
• Annual: $-1,122/yr
• Cap rate: 5.57%
• Cash-on-cash: -2.59%
• DSCR: 0.88
• 1% rule: 0.70%
• Cash to close: $43,260

Investor read

• This is a 2-bed/1.0-bath single-family listed at $154k.
• At list price, monthly cash flow is $-94 ($-1k/yr) — negative.
• To cash-flow at today's rent, offer at most $138k (10.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $108k (29.9% below list).
• It's been on market 26 days — a 2% lower offer ($152k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $108k (29.9% below list) — sets the bar for 1% rule.
• In year one you build about $17k of equity ($1k loan paydown + $15k appreciation (10.0% local appreciation)).
• Location reads 73/100 on livability (#259 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: employment C-, amenities F, commute F.
• Blue Earth Area Public School (town): math 29% / reading 44% proficiency, ranked #245 of 301 in MN (top 81%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Blue Earth Area Elementary (math 29% / reading 43%, grade F, #651 of 857 statewide, top 76%, 491 students, 54% FRL); Blue Earth Area Middle (math 22% / reading 47%, grade F, #178 of 258 statewide, top 70%, 140 students, 53% FRL); Blue Earth Area Secondary (math 32% / reading 47%, grade F, #246 of 471 statewide, top 59%, 418 students, 46% FRL).
• Watch-outs: built in 1880 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 36 active listings in the ZIP; 4 units permitted in Faribault County in 2024 (0 in 5+ unit buildings).
• Faribault County population projected at -11% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• Current owner paid $115k; 34% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• By year 3, paydown + projected appreciation supports a ~$42k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.

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?
• Built in 1880 — 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.
• 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.