734 Merrill St SW

Hutchinson, MN 55350

$314,900D

4 bd · 1.0 ba · 2,589 sqft · Built 1976 · SingleFamily · Pending · 10 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,303/mo
• Mortgage (P&I): −$1,651
• Tax + insurance: −$435
• HOA: −$0
• Vac / Maint / Mgmt: −$484
• Net cashflow: $-267/mo
• Annual: $-3,199/yr
• Cap rate: 5.28%
• Cash-on-cash: -3.63%
• DSCR: 0.84
• 1% rule: 0.73%
• Cash to close: $88,172

Investor read

• This is a 4-bed/1.0-bath single-family listed at $315k.
• At list price, monthly cash flow is $-267 ($-3k/yr) — negative.
• To cash-flow at today's rent, offer at most $268k (15.0% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $230k (26.9% below list).
• Only 10 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $230k (26.9% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $9k of value loss. Plan a longer hold.
• Location reads 80/100 on livability (#72 in MN, #1,744 nationally) — a professional / high-income tenant draw. Strengths: cost of living A+, housing A+, health & safety A+; Watch: commute F.
• Hutchinson Public School District (town): math 56% / reading 56% proficiency, ranked #62 of 301 in MN (top 21%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Hutchinson West Elementary (426 students, 42% FRL); Hutchinson Middle (math 53% / reading 59%, grade B-, #41 of 258 statewide, top 16%, 565 students, 37% FRL); Hutchinson Senior High (math 52% / reading 62%, grade C, #64 of 471 statewide, top 16%, 908 students, 31% FRL).
• Market conditions: 115 active listings in the ZIP; 2 comparable units currently listed for rent nearby; 57 units permitted in McLeod County in 2024 (0 in 5+ unit buildings).
• McLeod County population projected at -20% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 6 sale attempts since 25y 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.
• Cap rate 5.3% vs local median 3.1% in Hutchinson — 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

• 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?
• Built in 1976 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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.
• 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.