403 2nd St

Austin, MN 55912

$310,000B

7 bd · 5.7 ba · 3,833 sqft · Built 1900 · MultiFamily · Active · 168 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $6,489/mo
• Mortgage (P&I): −$1,626
• Tax + insurance: −$413
• HOA: −$0
• Vac / Maint / Mgmt: −$1,363
• Net cashflow: $3,087/mo
• Annual: $37,050/yr
• Cap rate: 18.24%
• Cash-on-cash: 42.68%
• DSCR: 2.90
• 1% rule: 2.09%
• Cash to close: $86,800

Investor read

• This is a 4×1.0bd/1.0ba + 1×2.0bd/1.0ba + 1×1.3333333333333333bd/0.7ba units multifamily listed at $310k.
• At list price, monthly cash flow is $3k ($37k/yr) — positive. Per door: $515/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($6k rent vs $310k).
• It's been on market 168 days — a 12% lower offer ($273k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $273k (12.0% 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 $9k of value loss. Plan a longer hold.
• Location reads 80/100 on livability (#77 in MN, #1,829 nationally) — a professional / high-income tenant draw. Strengths: cost of living A+, housing A+, health & safety A+; Watch: commute F.
• Austin Public School District (town): math 24% / reading 34% proficiency, ranked #267 of 301 in MN (top 89%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Zoned schools: Woodson Kindergarten Center (352 students, 71% FRL); I.J. Holton Intermediate School (math 19% / reading 41%, grade F, #199 of 258 statewide, top 78%, 741 students, 68% FRL); Austin Senior High (math 32% / reading 44%, grade F, #278 of 471 statewide, top 59%, 1,345 students, 60% FRL) — zoned schools average 66% FRL vs 46% district-wide (20 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Watch-outs: built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+11.6%/yr); 191 active listings in the ZIP; 53 units permitted in Mower County in 2024 (0 in 5+ unit buildings).
• 9 sale attempts since 27y 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 $218k; 43% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 8.0% rent growth), your $87k cash investment doubles in ~3 years — after that, you're playing with house money.
• Cap rate 18.2% vs local median 4.8% in Austin — 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.
• At $6,489/mo this rent would consume 111% of the median local household income ($70k/yr) (locally 759% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 168 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1900 — 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.
• 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.