6870 99th St S

Cottage Grove, MN 55016

$275,000D-

3 bd · 2.5 ba · 1,702 sqft · Built 2005 · Townhouse · Pending · 4 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,438/mo
• Mortgage (P&I): −$1,442
• Tax + insurance: −$401
• HOA: −$302
• Vac / Maint / Mgmt: −$512
• Net cashflow: $-219/mo
• Annual: $-2,626/yr
• Cap rate: 5.34%
• Cash-on-cash: -3.41%
• DSCR: 0.85
• 1% rule: 0.89%
• Cash to close: $77,000

Investor read

• This is a 3-bed/2.5-bath townhouse listed at $275k.
• At list price, monthly cash flow is $-219 ($-3k/yr) — negative.
• To cash-flow at today's rent, offer at most $236k (14.1% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $244k (11.3% below list).
• Only 4 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $236k (14.1% below list) — sets the bar for cash-flow.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $8k of value loss. Plan a longer hold.
• Location reads 77/100 on livability (#132 in MN, #2,948 nationally) — a middle-class / working-renter tenant base. Strengths: crime A+, employment A+, housing A+; Watch: cost of living C-, amenities F, commute F.
• South Washington County School District (suburban): math 52% / reading 61% proficiency, ranked #40 of 301 in MN (top 13%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease; only 14% free/reduced lunch — higher-income household profile.
• Market conditions: Rents rising (+3.8%/yr); 401 active listings in the ZIP; high-income renter base; 1,405 units permitted in Washington County in 2024 (121 in 5+ unit buildings).
• Washington County population projected at +16% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 7 sale attempts since 19y 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 $237k; 16% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 5.3% vs local median 3.5% in Cottage Grove — 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?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• 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.
• 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.