321 1st Ave SW

Baudette, MN 56623

$124,900D

2 bd · 1.0 ba · 1,451 sqft · Built 1925 · SingleFamily · Active · 62 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,085/mo
• Mortgage (P&I): −$655
• Tax + insurance: −$131
• HOA: −$0
• Vac / Maint / Mgmt: −$228
• Net cashflow: $71/mo
• Annual: $854/yr
• Cap rate: 6.98%
• Cash-on-cash: 2.44%
• DSCR: 1.11
• 1% rule: 0.87%
• Cash to close: $34,972

Investor read

• This is a 2-bed/1.0-bath single-family listed at $125k.
• At list price, monthly cash flow is $71 ($854/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 $108k (13.1% below list).
• It's been on market 62 days — a 6% lower offer ($117k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $108k (13.1% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $864 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 73/100 on livability (#243 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, health & safety A+, housing A; Watch: crime D+, amenities F, commute F.
• Lake Of The Woods School District (rural): math 30% / reading 39% proficiency, ranked #259 of 301 in MN (top 86%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Lake of The Woods Elementary (math 37% / reading 42%, grade F, #604 of 857 statewide, top 74%, 255 students, 45% FRL); Lake of The Woods Secondary (math 22% / reading 32%, grade F, #369 of 471 statewide, top 79%, 191 students, 40% FRL).
• Watch-outs: built in 1925 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 99 active listings in the ZIP; 13 units permitted in Lake of the Woods County in 2024 (0 in 5+ unit buildings).
• Lake of the Woods County population projected at -20% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 5 sale attempts since 11y 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.

Questions for listing agent

• It's been on market 62 days. Have you received any prior offers? Is the seller open to a 13% concession, seller financing, or rate buy-down credit?
• Built in 1925 — 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.
• 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.