600 Oak St

Farmington, MN 55024

$400,000B

7 bd · 4.0 ba · 4,306 sqft · Built 1900 · MultiFamily · Active · 29 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $7,368/mo
• Mortgage (P&I): −$2,098
• Tax + insurance: −$963
• HOA: −$0
• Vac / Maint / Mgmt: −$1,547
• Net cashflow: $2,760/mo
• Annual: $33,123/yr
• Cap rate: 14.57%
• Cash-on-cash: 29.57%
• DSCR: 2.32
• 1% rule: 1.84%
• Cash to close: $112,000

Investor read

• This is a 7-bed/4.0-bath multifamily listed at $400k.
• At list price, monthly cash flow is $3k ($33k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($7k rent vs $400k).
• It's been on market 29 days — a 2% lower offer ($394k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $394k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $12k of value loss. Plan a longer hold.
• Location reads 75/100 on livability (#203 in MN, #4,269 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, employment A+, housing A+; Watch: amenities F, commute F.
• Farmington Public School District (suburban): math 43% / reading 52% proficiency, ranked #104 of 301 in MN (top 35%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; only 12% free/reduced lunch — higher-income household profile.
• Watch-outs: built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 325 active listings in the ZIP; high-income renter base; 2,134 units permitted in Dakota County in 2024 (898 in 5+ unit buildings).
• Dakota County population projected at +11% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 3 sale attempts; this cycle's ask has dropped $50k (11%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $112k cash investment doubles in ~5 years — after that, you're playing with house money.
• Cap rate 14.6% vs local median 3.8% in Farmington — 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.
• At $7,368/mo this rent would consume 69% of the median local household income ($127k/yr) (locally 288% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

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 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?
• 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 apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.