Sequoia Plan

Otsego, MN 55301

$461,990F

5 bd · 3.0 ba · 2,505 sqft · Built — · SingleFamily · Active · 193 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,989/mo
• Mortgage (P&I): −$3,108
• Tax + insurance: −$988
• HOA: −$0
• Vac / Maint / Mgmt: −$628
• Net cashflow: $-1,735/mo
• Annual: $-20,819/yr
• Cap rate: 2.78%
• Cash-on-cash: -12.54%
• DSCR: 0.44
• 1% rule: 0.50%
• Cash to close: $165,962

Investor read

• This is a 5-bed/3.0-bath single-family listed at $462k. Condition is rated good.
• At list price, monthly cash flow is $-2k ($-21k/yr) — negative.
• To cash-flow at today's rent, offer at most $342k (26.0% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $299k (35.3% below list).
• It's been on market 193 days — a 12% lower offer ($407k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $299k (35.3% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $4k of loan paydown is wiped out by about $18k of value loss. Plan a longer hold.
• Location reads 69/100 on livability (#367 in MN) — a middle-class / working-renter tenant base. Strengths: employment A+, housing A+, crime A-; Watch: cost of living C-, amenities F, commute F.
• Independent School District 728 (suburban): math 56% / reading 60% proficiency, ranked #37 of 301 in MN (top 12%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease; only 14% free/reduced lunch — higher-income household profile.
• Zoned schools: Otsego Elementary (math 64% / reading 64%, grade B, #157 of 857 statewide, top 19%, 563 students, 21% FRL); Rogers Middle School (math 61% / reading 63%, grade B+, #19 of 258 statewide, top 8%, 979 students, 16% FRL); Rogers Senior High (math 66% / reading 64%, grade B, #28 of 471 statewide, top 6%, 1,740 students, 18% FRL) — zoned schools at 18% FRL track the district average.
• Market conditions: 279 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals leasing fast (median 1d on market — plan ~1-2 weeks tenant-placement turnaround); high-income renter base; 1,260 units permitted in Wright County in 2024 (180 in 5+ unit buildings).
• Wright County population projected at +9% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• Cap rate 2.8% vs local median 3.9% in Otsego — below-typical yield; the buyer is paying a premium for something (appreciation thesis, condition, location) that the cap rate doesn't capture.

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?
• It's been on market 193 days. Have you received any prior offers? Is the seller open to a 35% concession, seller financing, or rate buy-down credit?
• 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?
• 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.