2126 3rd Ave NW #93

Owatonna, MN 55060

$45,000B

3 bd · 2.0 ba · 1,216 sqft · Built 1997 · Manufactured · Pending · 32 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,313/mo
• Mortgage (P&I): −$236
• Tax + insurance: −$44
• HOA: −$0
• Vac / Maint / Mgmt: −$276
• Net cashflow: $757/mo
• Annual: $9,085/yr
• Cap rate: 26.48%
• Cash-on-cash: 72.10%
• DSCR: 4.21
• 1% rule: 2.92%
• Cash to close: $12,600

Investor read

• This is a 3-bed/2.0-bath manufactured listed at $45k.
• At list price, monthly cash flow is $757 ($9k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $45k).
• It's been on market 32 days — a 3% lower offer ($44k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $44k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $311 of loan paydown is wiped out by about $1k of value loss. Plan a longer hold.
• Location reads 76/100 on livability (#155 in MN, #3,413 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, crime A; Watch: amenities D-, commute F, health & safety D-.
• Owatonna Public School District (town): math 38% / reading 47% proficiency, ranked #194 of 301 in MN (top 64%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: 224 active listings in the ZIP; 7 comparable units currently listed for rent nearby; rentals lingering (median 44d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 100% of comp listings sitting > 30 days — soft ceiling on asking rent; solid renter incomes; 28 units permitted in Steele County in 2024 (0 in 5+ unit buildings).
• Steele County population projected to shrink 10% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $13k cash investment doubles in ~2 years — after that, you're playing with house money.
• Cap rate 26.5% vs local median 3.2% in Owatonna — 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

• It's been on market 32 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• 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 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.