2502 W 3rd St Unit 2504 W 3rd St

Duluth, MN 55806

$250,000C+

5 bd · 3.0 ba · 2,920 sqft · Built 1900 · MultiFamily · Active · 116 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,935/mo
• Mortgage (P&I): −$1,311
• Tax + insurance: −$417
• HOA: −$0
• Vac / Maint / Mgmt: −$1,036
• Net cashflow: $2,171/mo
• Annual: $26,051/yr
• Cap rate: 16.71%
• Cash-on-cash: 37.22%
• DSCR: 2.66
• 1% rule: 1.97%
• Cash to close: $70,000

Investor read

• This is a 5-bed/3.0-bath multifamily listed at $250k. Condition is rated fair.
• At list price, monthly cash flow is $2k ($26k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($5k rent vs $250k).
• It's been on market 116 days — a 9% lower offer ($228k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $228k (9.0% 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 $8k of value loss. Plan a longer hold.
• Location reads 82/100 on livability (#36 in MN, #1,060 nationally) — a professional / high-income tenant draw. Strengths: commute A+, cost of living A+, housing A+; Watch: amenities F.
• Duluth Public School District (urban): math 44% / reading 55% proficiency, ranked #132 of 301 in MN (top 44%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 44 active listings in the ZIP; lower-income renter base — watch delinquency; 639 units permitted in St. Louis County in 2024 (338 in 5+ unit buildings).
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $70k cash investment doubles in ~4 years — after that, you're playing with house money.
• Cap rate 16.7% vs local median 4.9% in Duluth — 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 $4,935/mo this rent would consume 138% of the median local household income ($43k/yr) (locally 506% 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 116 days. Have you received any prior offers? Is the seller open to a 9% concession, seller financing, or rate buy-down credit?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• 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.
• 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?
• 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.

Repairs flagged (vision-AI assessment)

• Minor: Kitchen clutter — Cluttered kitchen can be cleaned and organized.
• Minor: Bathroom clutter — Cluttered bathroom can be cleaned and organized.
• Major: Exterior construction — Exterior is under construction and requires completion of siding and framing.
• Minor: Interior organization — Interior areas are cluttered and need organization and cleaning.
• Unknown: HVAC/mechanical systems — No photos of HVAC and mechanical systems are available to assess.