406 Rochester Ave

Middlesborough, KY 40965

$40,000B

3 bd · 2.0 ba · 1,230 sqft · Built 1965 · SingleFamily · Active · 60 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,104/mo
• Mortgage (P&I): −$210
• Tax + insurance: −$466
• HOA: −$0
• Vac / Maint / Mgmt: −$232
• Net cashflow: $196/mo
• Annual: $2,350/yr
• Cap rate: 24.96%
• Cash-on-cash: 66.68%
• DSCR: 3.97
• 1% rule: 2.76%
• Cash to close: $11,200

Investor read

• This is a 3-bed/2.0-bath single-family listed at $40k. Condition is rated fair.
• At list price, monthly cash flow is $196 ($2k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $40k).
• It's been on market 60 days — a 3% lower offer ($39k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $39k (3.0% below list) — sets the bar for market timing.
• In year one you build about $2k of equity ($277 loan paydown + $1k appreciation (3.6% local appreciation)).
• Location reads 56/100 on livability (#456 in KY) — a working-class tenant base; expect higher turnover. Strengths: cost of living A+, housing A-; Watch: amenities F, commute F, employment F.
• Middlesboro Independent (town): math 14% / reading 34% proficiency, ranked #153 of 165 in KY (top 93%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 63% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Middlesboro Elementary School (math 12% / reading 27%, grade F, #572 of 676 statewide, top 88%, 453 students, 83% FRL); Middlesboro Middle School (math 17% / reading 41%, grade F, #156 of 217 statewide, top 74%, 281 students, 82% FRL); Middlesboro High School (math 12% / reading 22%, grade F, #222 of 254 statewide, top 89%, 352 students, 73% FRL) — zoned schools average 79% FRL vs 63% district-wide (17 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Watch-outs: flood insurance adds $427/mo.
• Market conditions: 86 active listings in the ZIP; lower-income renter base — watch delinquency; 44 units permitted in Bell County in 2024 (0 in 5+ unit buildings).
• Bell County population projected at -30% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 3 sale attempts; this cycle's ask has dropped $14k (26%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $18k; list at $40k implies a 122% gain — meaningful room to come down on a strong offer.
• At projected returns (3.6% appreciation + 3.0% rent growth), your $11k cash investment doubles in ~3 years — after that, you're playing with house money.
• Climate carrying-cost: in FEMA flood zone AE (mandatory federal flood insurance); extreme-heat days projected 7→21/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 25.0% vs local median 3.2% in Middlesborough — 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

• It's been on market 60 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• Built in 1965 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.

Repairs flagged (vision-AI assessment)

• Major: Kitchen cabinets — The cabinets are cluttered and appear to be in poor condition.
• Major: Bathroom fixtures — The bathrooms are cluttered and appear to be in poor condition.
• Moderate: Exterior siding — The exterior siding appears to be in fair condition, but there are some visible signs of wear and tear.
• Major: Flooring — The flooring in the interior appears to be in poor condition, with visible wear and tear.
• Major: Interior walls/paint — The interior walls and paint appear to be in poor condition, with visible wear and tear.
• Major: Landscaping — The landscaping appears to be in poor condition, with overgrown grass and debris on the ground.