Listing Agency: The Real Estate Company of Detroit Lakes Show Phone

Listed By: Grant Briard Show Phone

Source: Exprealty

Added: Aug 12 Changed: Aug 18 Last Checked: Aug 18 at 6:25AM

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Displayed information is deemed reliable but is not guaranteed and should be independently verified. All listing content including descriptions, pricing, images are the copyrighted material of The Real Estate Company of Detroit Lakes

Investment Insights

Based on property information with market context.

This updated triplex includes three separate residential units with a combined PropertySize of 3400 square feet. The lower level contains a 1,200-square-foot, two-bedroom, one-bath unit. Upstairs are a 1,600-square-foot, three-bedroom, one-bath unit and a 600-square-foot, one-bedroom, one-bath efficiency-style unit.

The property is located at 401 1st Ave SE in Pelican Rapids, Minnesota, near the pool. The source information indicates a cap rate near 10 percent, providing a relevant metric for evaluating the property as a residential income asset.

Key Highlights

• Three‑unit triplex with updated interiors
• 1,200‑square‑foot lower‑level unit with 2 bedrooms and 1 bathroom
• 1,600‑square‑foot upper unit with 3 bedrooms and 1 bathroom

Financial Insights

Estimated NOI and Cap Rate

NOI = area × lease_rate × (100 − vacancy) / 100 × (1 − expense_ratio). Net Operating Income — what the owner takes home each year before mortgage payments and income tax. Effective rent (asking rent minus vacancy losses) minus operating costs (taxes, insurance, maintenance, management).

NOI / Yr

$26,359

Cap rate = NOI / list price × 100. Capitalization rate — annual return on a fully cash purchase, before financing. NOI divided by price. Higher means more income per dollar invested, but usually also more risk or older condition. 5–8% is typical for stabilized commercial property; double digits often signal distressed deals.

Cap Rate

8.83%

Suggested Prices Based on Cap Rates Cap rates vary significantly by property type, market, and asset quality. Typical U.S. stable-market ranges: Multifamily — 4.5% to 6.5% (Class A in primary markets often sub-5%; Class C in secondary markets 6%+) Industrial / Logistics — 5.0% to 7.0% (compressed heavily in recent years due to e-commerce demand) Office — 6.5% to 9%+ (wide spread post-2020; CBD Class A vs. suburban Class B varies dramatically) Retail — 5.5% to 8.5% (grocery-anchored on the low end, unanchored strip centers higher) Hospitality / Hotels — 7.5% to 10%+ (higher due to operational risk) Self-Storage — 5.5% to 7.5% Medical Office — 6.0% to 7.5% Net Lease (single tenant, credit) — 5.0% to 7.0% depending on tenant credit and lease term Rules of thumb: Primary markets (NYC, SF, LA, Boston, DC) trade at lower cap rates than secondary/tertiary markets, often by 100–200 bps (bps, aka basis points; 1 bp = 0.01%). Class A assets trade ~50–150 bps tighter than Class B, and Class B tighter than Class C. Cap rates move inversely with price — a lower cap rate means a higher price for the same NOI. Spread to the 10-year Treasury is a common benchmark; historically 200–400 bps over the 10-year.

Cap Rate 5%

$527,180 $527.2K

Cap Rate 7%

$376,557 $376.6K

Cap Rate 9%

$292,878 $292.9K

Market Conditions

NOI Build-Up for 3,400 SF Vacancy — income lost from leasable area expected to sit empty during the year, subtracted from gross rent. EGI (Effective Gross Income) — gross rent minus vacancy losses, the realistic income before paying operating costs. OpEx (Operating Expenses) — recurring costs to operate the property (property tax, insurance, utilities, maintenance, management); excludes financing and capital improvements. NOI (Net Operating Income) — income a property generates after operating costs but before financing and taxes.

Gross rent

$50.2K $14.76/SF

− Vacancy

−$2.3K −$0.66/SF

EGI

$47.9K $14.10/SF

− OpEx

−$21.6K −$6.34/SF

NOI

$26.4K $7.75/SF

Area

Otter Tail County, MN

Vacancy

4.50%

Lease Rate

$14.76 /SF/Yr

Expense Ratio

45.00%

Simulate Cap Rate and NOI

Suggested Prices Based on Cap Rates Cap rates vary significantly by property type, market, and asset quality. Typical U.S. stable-market ranges: Multifamily — 4.5% to 6.5% (Class A in primary markets often sub-5%; Class C in secondary markets 6%+) Industrial / Logistics — 5.0% to 7.0% (compressed heavily in recent years due to e-commerce demand) Office — 6.5% to 9%+ (wide spread post-2020; CBD Class A vs. suburban Class B varies dramatically) Retail — 5.5% to 8.5% (grocery-anchored on the low end, unanchored strip centers higher) Hospitality / Hotels — 7.5% to 10%+ (higher due to operational risk) Self-Storage — 5.5% to 7.5% Medical Office — 6.0% to 7.5% Net Lease (single tenant, credit) — 5.0% to 7.0% depending on tenant credit and lease term Rules of thumb: Primary markets (NYC, SF, LA, Boston, DC) trade at lower cap rates than secondary/tertiary markets, often by 100–200 bps (bps, aka basis points; 1 bp = 0.01%). Class A assets trade ~50–150 bps tighter than Class B, and Class B tighter than Class C. Cap rates move inversely with price — a lower cap rate means a higher price for the same NOI. Spread to the 10-year Treasury is a common benchmark; historically 200–400 bps over the 10-year.

Cap Rate 5%

$527,180

Cap Rate 7%

$376,557

Cap Rate 9%

$292,878

Alternative Uses

Best Use

Multifamily LT 5

$407.0K

$356.1K – $474.8K (±1% cap)

NOI $28,489 @ 7.0% cap · market cap 9.54%

Second Best

Apartment 5plus

$376.6K

$329.5K – $439.3K (±1% cap)

NOI $26,359 @ 7.0% cap · market cap 8.83%

Theoretical Best

Office A

$738.6K

$646.3K – $861.7K (±1% cap)

NOI $51,702 @ 7.0% cap · market cap 17.32%

Zoning and permitted uses should be independently verified with authorities.

Property Analytics

Property Profile

Current Use

Triplexes

Suggested Use

Top Pick Parking Lot & Garage HVAC Service Storage Facility Furniture & Home Goods Garden Center Hair Salon

Score = modeled unmet demand for each use within ~1 mi (higher = bigger opportunity). Zoning and permitted uses should be independently verified with local authorities.

Lease Details

3

Residential units

Location Intelligence

Trade Area within ½ mile

265

Businesses Nearby

Explore this area Business Placement

Demographics for 56572, MN

5,747

Population

4,191

Households

1.4

Avg Household Size

46

Median Age

29%

College-Educated

89%

High-School Grad

171.4 sq mi

ZIP Area

34

Density / Sq Mi

$83,631

Median Household Income

$47,311

Median Earnings

$412

Median Rent

$291,600

Median Home Value

Market

Vacancy Rate% for Multifamily in Midwest region

6.5% 2022

7.5% 2023

7.8% 2024

8% 2025

Questions? Ask Rey

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Frequently Asked Questions

What type of property is this?

Triplex - Three residential units offer a mix of two-bedroom, one-bedroom, and efficiency layouts.

Where is this triplex located?

The property is located at 401 1st Ave Se Pelican Rapids, MN.

What is the asking price?

The asking price for this property is $298,500.

What are key features of this property?

This property features: Three‑unit triplex with updated interiors; 1,200‑square‑foot lower‑level unit with 2 bedrooms and 1 bathroom; 1,600‑square‑foot upper unit with 3 bedrooms and 1 bathroom