704 E 18th St

Spencer, IA 51301

$170,000D

3 bd · 1.5 ba · 1,236 sqft · Built 1976 · SingleFamily · Pending · 6 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,475/mo
• Mortgage (P&I): −$891
• Tax + insurance: −$273
• HOA: −$0
• Vac / Maint / Mgmt: −$310
• Net cashflow: $1/mo
• Annual: $9/yr
• Cap rate: 6.30%
• Cash-on-cash: 0.02%
• DSCR: 1.00
• 1% rule: 0.87%
• Cash to close: $47,600

Investor read

• This is a 3-bed/1.5-bath single-family listed at $170k.
• At list price, monthly cash flow is $1 ($9/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $148k (13.2% below list).
• Only 6 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $148k (13.2% 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 77/100 on livability (#168 in IA, #3,020 nationally) — a middle-class / working-renter tenant base. Strengths: schools A+, crime A+, cost of living A+; Watch: employment D, amenities F, commute F.
• Spencer Community School District (town): math 73% / reading 72% proficiency, ranked #114 of 289 in IA (top 39%) — strong family-tenant draw, lease renewals of 3-5y typical.
• Market conditions: 109 active listings in the ZIP; 11 units permitted in Clay County in 2024 (0 in 5+ unit buildings).
• Clay County population projected to shrink 6% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• Cap rate 6.3% vs local median 4.7% in Spencer — 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

• Built in 1976 — 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.
• 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?
• 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.