Real Estate Investing in Underwood, Minnesota (56586)
Everything the listing leaves out — vacancy, rent trend, cap rate, landlord climate. All free.
Should you buy in 56586 (Underwood, MN)? Our answer, based on the numbers below.
Proceed carefully. Weak appreciation or affordability makes this a harder case for most buyers.
A middle-of-the-road market. Workable, but the best opportunities may be nearby ZIPs rather than this one.
- High vacancy: 38.4% of homes vacant — above national norms.
- High price-to-rent: Price-to-rent ratio 28.2 — hard to cash-flow at these prices.
• Modeled rent — no observed market rent for this ZIP; the figure is estimated from HUD fair-market rent.
What’s happening in Underwood, MN (56586)?
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Market Analysis: 56586 Underwood
The 56586 ZIP covers a section of Underwood that demands careful diligence. Prices near $350K look accessible, but the work to make a deal cash flow is real.
Turning to rents, the numbers look inviting — $350K purchase price, 0.0% nominal cap — the work to hit that pro forma in 56586 is substantial and deserves full respect.
The gap between 56586 and stronger Underwood ZIPs is not closing quickly. Investors should weight long-horizon assumptions accordingly.
A resilient renter share of 8% in 56586 is not, on its own, a problem — but paired with below-average income and high mobility, it changes the operating playbook.
appears to the ZIP is not uninvestable, but it is unforgiving. Section 8 landlords, local operators, and specialized value-add funds are the investor types that tend to succeed.
Here's what matters if you're considering buying a home in Underwood:
Market Trends
Home Value History (with trend line)
📊 How Does 56586 Compare?
| Metric | 56586 | Underwood | Fergus Falls, MN | Minnesota |
|---|---|---|---|---|
| Home Value | $349,991 | $349,991 | N/A | $340,597 |
| 5-Year CAGR | 6.2% | 6.2% | N/A | 4.9% |
| Avg Rent | $1,035 | $1,035 | N/A | - |
| Cap Rate | 2.3% | 2.3% | - | - |
Similar ZIPs Within 25 Miles
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Landlord Ground Truth
Real numbers from people who own or manage rentals in ZIP 56586 (Underwood, MN). Anonymous, moderated, never written by AI.
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📊 Market Snapshot
| Home Value | $349,991 |
| Monthly Rent | $1,035 |
| Price-to-Rent | 28.2:1 |
| 1% Rule | ✗ Fails |
💰 Return Metrics
| Gross Yield | 3.6% |
| Cap Rate | 2.3% |
| 5-Year IRR | 8.5% |
📈 Home Appreciation
| 1-Year | +9.9% ▲ |
| 3-Year CAGR | +5.7% ▲ |
| 5-Year CAGR | +6.2% ▲ |
| 10-Year CAGR | +7.1% ▲ |
🏠 Rent Trends
| 1-Year | N/A |
| 3-Year CAGR | N/A |
| 5-Year CAGR | N/A |
The current 30-yr mortgage rate (6.8%) exceeds the estimated cap rate (2.3%). Financing reduces your cash-on-cash return below the cap rate. Markets like this may still make sense as IRR plays — factoring in appreciation, depreciation, and a future refinance when rates drop.
Run an IRR Analysis →⚠️ Risk Signals
Composite view of factors that can impact a ZIP's stability and your downside risk.
Demographics in 56586
Population: 1,798
Crime & Safety
Crime & Safety Data Coming Soon
We're integrating comprehensive crime statistics including violent crime rates, property crime, and safety scores to help you make informed investment decisions.
Expected: Q1 2025
🎓 Schools in 56586
Schools in This ZIP Code
About Repit School Scores
Traditional school ratings rely heavily on standardized test scores, which often reflect family income more than school quality. Repit takes a different approach.
We evaluate schools based on factors that research shows actually impact educational outcomes:
- Class Size — Smaller classes mean more individual attention
- School Funding — Resources available for programs, staff, and facilities
- Community Factors — Neighborhood characteristics that influence student success
- School Environment — Size, type, and structure
Scores are updated annually using federal education data.
🎓 Nearby Colleges & Universities
Investor Insight: With 2,669 students living off-campus nearby, this area has strong rental demand from the college population.
Frequently Asked Questions
Is Underwood, MN a smart market for rental property?
Underwood, MN scores 3.0/5 for investability. Home values sit at $350K and rents near $1,035/mo, which keeps the rent-to-price ratio in reasonable territory for buy-and-hold investors.
Are homes affordable in Underwood, MN?
The median home value in Underwood, MN is roughly $350K. That puts it reasonable relative to the MN statewide average.
What do landlords charge for rent in Underwood, MN?
Underwood, MN rentals go for roughly $1,035/mo a month. That puts gross yield in solid territory relative to $350K acquisition costs.
Is the tenant base reliable in Underwood, MN?
The tenant pool in Underwood, MN is solid, supported by local employment and population fundamentals. Rents of $1,035/mo are well-absorbed by the market.
What is the best play in Underwood, MN?
In Underwood, MN the resilient play is typically careful cash-flow rentals with hands-on management. The combination of $350K prices and $1,035/mo rents suits that approach.
You know 56586 now. You don’t know where it ranks.
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How 56586 ranks in Fergus Falls, MN
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