505 S 3rd Ave E

Newton, IA 50208

$171,000C-

4 bd · 2.5 ba · 2,212 sqft · Built 1900 · SingleFamily · Active · 39 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,585/mo
• Mortgage (P&I): −$897
• Tax + insurance: −$327
• HOA: −$0
• Vac / Maint / Mgmt: −$333
• Net cashflow: $28/mo
• Annual: $342/yr
• Cap rate: 6.49%
• Cash-on-cash: 0.71%
• DSCR: 1.03
• 1% rule: 0.93%
• Cash to close: $47,880

Investor read

• This is a 4-bed/2.5-bath single-family listed at $171k.
• At list price, monthly cash flow is $28 ($342/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $159k (7.3% below list).
• It's been on market 39 days — a 3% lower offer ($166k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $159k (7.3% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $5k of value loss. Plan a longer hold.
• Location reads 77/100 on livability (#169 in IA, #3,069 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: crime C-, employment D+, amenities F.
• Newton Community School District (town): math 59% / reading 62% proficiency, ranked #245 of 289 in IA (top 85%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 242 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals at typical pace (median 25d on market — plan ~3-4 weeks tenant-placement turnaround); 16 units permitted in Jasper County in 2024 (0 in 5+ unit buildings).
• Jasper County population projected to shrink 7% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 2 sale attempts since 4y ago; this cycle's ask has dropped $19k (10%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Cap rate 6.5% vs local median 3.1% in Newton — 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.
• This rent runs 31% of the median local income ($62k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• It's been on market 39 days. Have you received any prior offers? Is the seller open to a 7% concession, seller financing, or rate buy-down credit?
• Built in 1900 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are A-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.
• 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.