1505 E 38th St

Minneapolis, MN 55407

$200,000D

2 bd · 1.5 ba · 1,040 sqft · Built 1984 · Condo · Pending · 34 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,654/mo
• Mortgage (P&I): −$1,049
• Tax + insurance: −$229
• HOA: −$255
• Vac / Maint / Mgmt: −$347
• Net cashflow: $-226/mo
• Annual: $-2,717/yr
• Cap rate: 4.93%
• Cash-on-cash: -4.85%
• DSCR: 0.78
• 1% rule: 0.83%
• Cash to close: $56,000

Investor read

• This is a 2-bed/1.5-bath condo listed at $200k.
• At list price, monthly cash flow is $-226 ($-3k/yr) — negative.
• To cash-flow at today's rent, offer at most $160k (20.0% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $165k (17.3% below list).
• It's been on market 34 days — a 3% lower offer ($194k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $160k (20.0% below list) — sets the bar for cash-flow.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $6k of value loss. Plan a longer hold.
• Location reads 78/100 on livability (#110 in MN, #2,525 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, housing A+; Watch: cost of living C-, crime F.
• Minneapolis Public School District (urban): math 35% / reading 46% proficiency, ranked #217 of 301 in MN (top 72%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Bancroft Elementary (math 17% / reading 27%, grade F, #732 of 857 statewide, top 88%, 369 students, 56% FRL); Sanford Middle (math 30% / reading 54%, grade D-, #131 of 258 statewide, top 53%, 738 students, 38% FRL); Roosevelt High (math 24%, 1,044 students, 59% FRL).
• Market conditions: Rents rising fast (+4.3%/yr); 146 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals at typical pace (median 27d on market — plan ~3-4 weeks tenant-placement turnaround); 40% of comp listings sitting > 30 days — soft ceiling on asking rent; solid renter incomes; 4,651 units permitted in Hennepin County in 2024 (2,443 in 5+ unit buildings).
• Hennepin County population projected at +30% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Current owner paid $61k; list at $200k implies a 226% gain — meaningful room to come down on a strong offer.
• Cap rate 4.9% vs local median 3.1% in Minneapolis — 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?
• It's been on market 34 days. Have you received any prior offers? Is the seller open to a 20% 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?
• Any open or pending special assessments — roof, HVAC, plumbing, elevator, façade? What's the per-unit balance and payoff schedule, and is the seller paying it off at close or rolling it to the buyer?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Crime grade is F in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• 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.