3747 1st St SE

Washington, DC 20032

$540,000B

4 bd · None ba · 3,876 sqft · Built 1952 · MultiFamily · Active · 25 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $8,047/mo
• Mortgage (P&I): −$2,832
• Tax + insurance: −$900
• HOA: −$0
• Vac / Maint / Mgmt: −$1,690
• Net cashflow: $2,625/mo
• Annual: $31,504/yr
• Cap rate: 12.13%
• Cash-on-cash: 20.84%
• DSCR: 1.93
• 1% rule: 1.49%
• Cash to close: $151,200

Investor read

• This is a 4-bed/?-bath multifamily listed at $540k.
• At list price, monthly cash flow is $3k ($32k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($8k rent vs $540k).
• It's been on market 25 days — a 2% lower offer ($532k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $532k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $4k of loan paydown is wiped out by about $16k of value loss. Plan a longer hold.
• Location reads 73/100 on livability (#1 in DC) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, employment A+; Watch: crime F, cost of living F.
• District Of Columbia Public Schools (urban): math 33% / reading 40% proficiency, ranked #8 of 32 in DC (top 25%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 65% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1952 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+4.0%/yr); 145 active listings in the ZIP; 1,737 units permitted in District of Columbia in 2024 (1,506 in 5+ unit buildings).
• District of Columbia County population projected at +50% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 3 sale attempts since 23y ago; this cycle's ask has dropped $55k (9%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $465k; 16% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 4.0% rent growth), your $151k cash investment doubles in ~6 years — after that, you're playing with house money.
• Climate carrying-cost: extreme-heat days projected 7→15/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 12.1% vs local median 2.5% in Washington — 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.
• At $8,047/mo this rent would consume 197% of the median local household income ($49k/yr) (locally 4530% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• Built in 1952 — 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.
• Crime grade is F in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• 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 apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.