1507 E 4th St

Duluth, MN 55812

$229,000A-

5 bd · 2.0 ba · 2,165 sqft · Built 1908 · MultiFamily · Active · 71 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,465/mo
• Mortgage (P&I): −$1,201
• Tax + insurance: −$347
• HOA: −$0
• Vac / Maint / Mgmt: −$728
• Net cashflow: $1,189/mo
• Annual: $14,270/yr
• Cap rate: 12.52%
• Cash-on-cash: 22.26%
• DSCR: 1.99
• 1% rule: 1.51%
• Cash to close: $64,120

Investor read

• This is a 1×2bd/1.0ba + 1×3bd/1.0ba units multifamily listed at $229k.
• At list price, monthly cash flow is $1k ($14k/yr) — positive. Per door: $595/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $229k).
• It's been on market 71 days — a 6% lower offer ($215k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $215k (6.0% 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 $7k 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 1908 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+8.1%/yr); 50 active listings in the ZIP; 6 comparable units currently listed for rent nearby; rentals at typical pace (median 14d on market — plan ~3-4 weeks tenant-placement turnaround); 639 units permitted in St. Louis County in 2024 (338 in 5+ unit buildings).
• 3 sale attempts since 19y ago; this cycle's ask has dropped $21k (8%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $140k; list at $229k implies a 64% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 8.0% rent growth), your $64k cash investment doubles in ~5 years — after that, you're playing with house money.
• Cap rate 12.5% 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 $3,465/mo this rent would consume 63% of the median local household income ($66k/yr) (locally 655% 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 71 days. Have you received any prior offers? Is the seller open to a 6% 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 1908 — 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.