117 N Cottage Grove Ave Ave

Luverne, MN 56156

$159,900D

4 bd · 2.0 ba · 1,088 sqft · Built 1908 · SingleFamily · Active · 78 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,125/mo
• Mortgage (P&I): −$839
• Tax + insurance: −$147
• HOA: −$0
• Vac / Maint / Mgmt: −$236
• Net cashflow: $-97/mo
• Annual: $-1,163/yr
• Cap rate: 5.57%
• Cash-on-cash: -2.60%
• DSCR: 0.88
• 1% rule: 0.70%
• Cash to close: $44,772

Investor read

• This is a 4-bed/2.0-bath single-family listed at $160k.
• At list price, monthly cash flow is $-97 ($-1k/yr) — negative.
• To cash-flow at today's rent, offer at most $143k (10.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $112k (29.6% below list).
• It's been on market 78 days — a 6% lower offer ($150k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $112k (29.6% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $5k of value loss. Plan a longer hold.
• Location reads 86/100 on livability (#14 in MN, #455 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, cost of living A+, housing A+; Watch: commute F.
• Luverne Public School District (rural): math 55% / reading 58% proficiency, ranked #64 of 301 in MN (top 21%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1908 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 64 active listings in the ZIP; 2 comparable units currently listed for rent nearby; 66 units permitted in Rock County in 2024 (50 in 5+ unit buildings).
• Rock County population projected to shrink 9% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• Cap rate 5.6% vs local median 3.6% in Luverne — 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

• 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?
• It's been on market 78 days. Have you received any prior offers? Is the seller open to a 30% concession, seller financing, or rate buy-down credit?
• Built in 1908 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• 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?
• 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.