2417 Vermilion Rd

Duluth, MN 55803

$500,000C-

5 bd · 4.0 ba · 2,912 sqft · Built 2003 · MultiFamily · Active · 66 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $5,803/mo
• Mortgage (P&I): −$2,622
• Tax + insurance: −$854
• HOA: −$0
• Vac / Maint / Mgmt: −$1,219
• Net cashflow: $1,109/mo
• Annual: $13,303/yr
• Cap rate: 9.09%
• Cash-on-cash: 9.98%
• DSCR: 1.44
• 1% rule: 1.16%
• Cash to close: $140,000

Investor read

• This is a 3 × 2-bed/?-bath units multifamily listed at $500k.
• At list price, monthly cash flow is $1k ($13k/yr) — positive. Per door: $370/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($6k rent vs $500k).
• It's been on market 66 days — a 6% lower offer ($470k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $470k (6.0% 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 $15k of value loss. Plan a longer hold.
• Location reads 82/100 on livability (#36 in MN, #1,060 nationally) — a professional / high-income tenant draw. Strengths: commute A+, cost of living A+, housing A+; Watch: amenities F.
• Duluth Public School District (urban): math 44% / reading 55% proficiency, ranked #132 of 301 in MN (top 44%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: flood insurance adds $56/mo.
• Market conditions: 109 active listings in the ZIP; solid renter incomes; 639 units permitted in St. Louis County in 2024 (338 in 5+ unit buildings).
• Current owner paid $44k; list at $500k implies a 1036% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: major flood risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 9.1% vs local median 4.9% in Duluth — 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 $5,803/mo this rent would consume 66% of the median local household income ($106k/yr) (locally 322% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 66 days. Have you received any prior offers? Is the seller open to a 6% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• 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.