208 State 371 SW

Backus, MN 56435

$224,900D

3 bd · 2.0 ba · 1,120 sqft · Built 1994 · SingleFamily · Pending · 12 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,723/mo
• Mortgage (P&I): −$1,179
• Tax + insurance: −$154
• HOA: −$0
• Vac / Maint / Mgmt: −$362
• Net cashflow: $28/mo
• Annual: $336/yr
• Cap rate: 6.44%
• Cash-on-cash: 0.53%
• DSCR: 1.02
• 1% rule: 0.77%
• Cash to close: $62,972

Investor read

• This is a 3-bed/2.0-bath single-family listed at $225k.
• At list price, monthly cash flow is $28 ($336/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $172k (23.4% below list).
• Only 12 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $172k (23.4% 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 $7k of value loss. Plan a longer hold.
• Location reads 66/100 on livability (#493 in MN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+; Watch: health & safety C-, crime D+, employment D+.
• Pine River-Backus School District (rural): math 26% / reading 46% proficiency, ranked #250 of 301 in MN (top 83%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: 46 active listings in the ZIP; 285 units permitted in Cass County in 2024 (0 in 5+ unit buildings).
• Cass County population projected at -20% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 8 sale attempts since 20y 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 $78k; list at $225k implies a 188% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.

Questions for listing agent

• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• Crime grade is D 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.
• 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.