422 2nd St SE

Wadena, MN 56482

$49,900B-

2 bd · 1.0 ba · 736 sqft · Built 1900 · SingleFamily · Pending · 10 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $826/mo
• Mortgage (P&I): −$262
• Tax + insurance: −$65
• HOA: −$0
• Vac / Maint / Mgmt: −$173
• Net cashflow: $326/mo
• Annual: $3,910/yr
• Cap rate: 14.13%
• Cash-on-cash: 27.99%
• DSCR: 2.25
• 1% rule: 1.65%
• Cash to close: $13,972

Investor read

• This is a 2-bed/1.0-bath single-family listed at $50k.
• At list price, monthly cash flow is $326 ($4k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($826 rent vs $50k).
• Only 10 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $345 of loan paydown is wiped out by about $1k of value loss. Plan a longer hold.
• Location reads 67/100 on livability (#433 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, crime A; Watch: health & safety C-, schools D+, amenities F.
• Wadena-Deer Creek School District (town): math 33% / reading 45% proficiency, ranked #235 of 301 in MN (top 78%) — 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: 50 active listings in the ZIP; 52 units permitted in Wadena County in 2024 (0 in 5+ unit buildings).
• Wadena County population projected to shrink 6% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 2 sale attempts since 6y 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.
• Current owner paid $36k; 39% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $14k cash investment doubles in ~5 years — after that, you're playing with house money.
• Cap rate 14.1% vs local median 3.3% in Wadena — 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

• Built in 1900 — 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 D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.