505 Peony St SE

Rochester, MN 55904

$245,000C

3 bd · 2.0 ba · 1,560 sqft · Built 2005 · Manufactured · Pending · 27 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,513/mo
• Mortgage (P&I): −$1,285
• Tax + insurance: −$332
• HOA: −$100
• Vac / Maint / Mgmt: −$528
• Net cashflow: $268/mo
• Annual: $3,217/yr
• Cap rate: 7.61%
• Cash-on-cash: 4.69%
• DSCR: 1.21
• 1% rule: 1.03%
• Cash to close: $68,600

Investor read

• This is a 3-bed/2.0-bath manufactured listed at $245k.
• At list price, monthly cash flow is $268 ($3k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $245k).
• It's been on market 27 days — a 2% lower offer ($241k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $241k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $7k of value loss. Plan a longer hold.
• Location reads 92/100 on livability (#1 in MN, #27 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, employment A+.
• Rochester Public School District (urban): math 40% / reading 51% proficiency, ranked #152 of 301 in MN (top 50%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Bamber Valley Elementary (math 48% / reading 53%, grade D+, #412 of 857 statewide, top 48%, 633 students, 26% FRL); Mayo Senior High (math 42% / reading 65%, grade C-, #104 of 471 statewide, top 22%, 1,862 students, 31% FRL) — zoned schools at 28% FRL track the district average.
• Market conditions: Rents rising (+2.1%/yr); 149 active listings in the ZIP; 4 comparable units currently listed for rent nearby; rentals leasing fast (median 14d on market — plan ~1-2 weeks tenant-placement turnaround); solid renter incomes; 1,267 units permitted in Olmsted County in 2024 (915 in 5+ unit buildings).
• Olmsted County population projected at +16% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 8 sale attempts since 20y 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.
• Cap rate 7.6% vs local median 3.5% in Rochester — 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.
• This rent runs 39% of the median local income ($77k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are A-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.