500 E Water St

Litchfield, IL 62056

$39,000B-

2 bd · 1.0 ba · 789 sqft · Built 1946 · SingleFamily · Active · 180 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $843/mo
• Mortgage (P&I): −$205
• Tax + insurance: −$135
• HOA: −$0
• Vac / Maint / Mgmt: −$177
• Net cashflow: $326/mo
• Annual: $3,913/yr
• Cap rate: 16.33%
• Cash-on-cash: 35.83%
• DSCR: 2.59
• 1% rule: 2.16%
• Cash to close: $10,920

Investor read

• This is a 2-bed/1.0-bath single-family listed at $39k.
• At list price, monthly cash flow is $326 ($4k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($843 rent vs $39k).
• It's been on market 180 days — a 12% lower offer ($34k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $34k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $270 of loan paydown is wiped out by about $1k of value loss. Plan a longer hold.
• Location reads 68/100 on livability (#448 in IL) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: crime C-, employment D+, schools F.
• Litchfield CUSD 12 (town): math 15% / reading 34% proficiency, ranked #359 of 620 in IL (top 58%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Watch-outs: property tax is 3.7% of price; built in 1946 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 59 active listings in the ZIP; 12 units permitted in Montgomery County in 2024 (0 in 5+ unit buildings).
• Montgomery County population projected at -20% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• Current owner paid $26k; list at $39k implies a 50% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $11k cash investment doubles in ~4 years — after that, you're playing with house money.
• Cap rate 16.3% vs local median 4.5% in Litchfield — 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 180 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1946 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Property tax is high relative to price — has the assessment been appealed recently, and will the sale trigger a re-assessment?
• 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 F-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.