41922 County Highway 38

Millerville, MN 56524

$134,900D

2 bd · 1.0 ba · 904 sqft · Built 1940 · SingleFamily · Pending · 13 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $897/mo
• Mortgage (P&I): −$707
• Tax + insurance: −$116
• HOA: −$0
• Vac / Maint / Mgmt: −$188
• Net cashflow: $-115/mo
• Annual: $-1,380/yr
• Cap rate: 5.27%
• Cash-on-cash: -3.65%
• DSCR: 0.84
• 1% rule: 0.66%
• Cash to close: $37,772

Investor read

• This is a 2-bed/1.0-bath single-family listed at $135k.
• At list price, monthly cash flow is $-115 ($-1k/yr) — negative.
• To cash-flow at today's rent, offer at most $115k (15.1% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $90k (33.5% below list).
• Only 13 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $90k (33.5% below list) — sets the bar for 1% rule.
• In year one you build about $9k of equity ($933 loan paydown + $8k appreciation (5.9% local appreciation)).
• Location reads 58/100 on livability (#811 in MN) — a working-class tenant base; expect higher turnover. Strengths: cost of living A+, housing A+; Watch: health & safety C-, crime D+, schools F.
• Battle Lake Public School District (rural): math 59% / reading 61% proficiency, ranked #45 of 301 in MN (top 15%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1940 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 20 active listings in the ZIP; 140 units permitted in Otter Tail County in 2024 (48 in 5+ unit buildings).
• 9 sale attempts since 25y 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.
• Current owner paid $112k; 21% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• By year 4, paydown + projected appreciation supports a ~$30k 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 1940 — 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 F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• Crime grade is D in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• 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.