5617 138th St N

Hugo, MN 55038

$264,900C-

3 bd · 3.0 ba · 1,534 sqft · Built 2002 · Townhouse · Pending · 115 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,699/mo
• Mortgage (P&I): −$1,389
• Tax + insurance: −$341
• HOA: −$319
• Vac / Maint / Mgmt: −$567
• Net cashflow: $83/mo
• Annual: $998/yr
• Cap rate: 6.67%
• Cash-on-cash: 1.35%
• DSCR: 1.06
• 1% rule: 1.02%
• Cash to close: $74,172

Investor read

• This is a 3-bed/3.0-bath townhouse listed at $265k.
• At list price, monthly cash flow is $83 ($998/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $265k).
• It's been on market 115 days — a 9% lower offer ($241k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $241k (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 71/100 on livability (#314 in MN) — a middle-class / working-renter tenant base. Strengths: employment A+, housing A+, schools A; Watch: amenities F, commute F, health & safety F.
• White Bear Lake School District (suburban): math 45% / reading 57% proficiency, ranked #83 of 301 in MN (top 28%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Market conditions: 279 active listings in the ZIP; 2 comparable units currently listed for rent nearby; high-income renter base; 1,405 units permitted in Washington County in 2024 (121 in 5+ unit buildings).
• Washington County population projected at +16% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 8 sale attempts since 24y ago; this cycle's ask has dropped $15k (5%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $190k; 39% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 6.7% vs local median 3.1% in Hugo — 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 115 days. Have you received any prior offers? Is the seller open to a 9% 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?
• 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 A-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.
• 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.