5421 Upper 183rd St

Farmington, MN 55024

$234,900D

2 bd · 3.0 ba · 1,430 sqft · Built 1994 · Townhouse · Pending · 45 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,104/mo
• Mortgage (P&I): −$1,232
• Tax + insurance: −$392
• HOA: −$375
• Vac / Maint / Mgmt: −$442
• Net cashflow: $-336/mo
• Annual: $-4,036/yr
• Cap rate: 4.57%
• Cash-on-cash: -6.14%
• DSCR: 0.73
• 1% rule: 0.90%
• Cash to close: $65,772

Investor read

• This is a 2-bed/3.0-bath townhouse listed at $235k. Condition is rated good.
• At list price, monthly cash flow is $-336 ($-4k/yr) — negative.
• To cash-flow at today's rent, offer at most $186k (20.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $210k (10.4% below list).
• It's been on market 45 days — a 3% lower offer ($228k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $186k (20.7% below list) — sets the bar for cash-flow.
• 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 75/100 on livability (#203 in MN, #4,269 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, employment A+, housing A+; Watch: amenities F, commute F.
• Farmington Public School District (suburban): math 43% / reading 52% proficiency, ranked #104 of 301 in MN (top 35%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; only 12% free/reduced lunch — higher-income household profile.
• Market conditions: 325 active listings in the ZIP; 4 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 50% of comp listings sitting > 30 days — soft ceiling on asking rent; high-income renter base; 2,134 units permitted in Dakota County in 2024 (898 in 5+ unit buildings).
• Dakota County population projected at +11% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 3 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.
• Current owner paid $163k; 44% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 4.6% vs local median 3.8% in Farmington — meaningfully above typical; check what's discounted (condition, days-on-market, listing class) to confirm the premium yield is real.

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?
• It's been on market 45 days. Have you received any prior offers? Is the seller open to a 21% concession, seller financing, or rate buy-down credit?
• 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 B-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.