47 2nd St NW

Pelican Rapids, MN 56572

$73,600B

3 bd · 1.0 ba · 518 sqft · Built 1900 · SingleFamily · Active · 91 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,409/mo
• Mortgage (P&I): −$386
• Tax + insurance: −$126
• HOA: −$0
• Vac / Maint / Mgmt: −$296
• Net cashflow: $602/mo
• Annual: $7,224/yr
• Cap rate: 16.11%
• Cash-on-cash: 35.05%
• DSCR: 2.56
• 1% rule: 1.92%
• Cash to close: $20,608

Investor read

• This is a 3-bed/1.0-bath single-family listed at $74k.
• At list price, monthly cash flow is $602 ($7k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $74k).
• It's been on market 91 days — a 9% lower offer ($67k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $67k (9.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $509 of loan paydown is wiped out by about $2k of value loss. Plan a longer hold.
• Location reads 78/100 on livability (#114 in MN, #2,581 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities F, commute F.
• Pelican Rapids Public School District (rural): math 45% / reading 54% proficiency, ranked #123 of 301 in MN (top 41%) — 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: 175 active listings in the ZIP; 140 units permitted in Otter Tail County in 2024 (48 in 5+ unit buildings).
• Current owner paid $18k; list at $74k implies a 298% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $21k cash investment doubles in ~4 years — after that, you're playing with house money.
• Cap rate 16.1% vs local median 1.4% in Pelican Rapids — 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.

Questions for listing agent

• It's been on market 91 days. Have you received any prior offers? Is the seller open to a 9% concession, seller financing, or rate buy-down credit?
• 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.
• How much new for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.