416 40th St E

Memphis, FL 34221

$384,000C-

2 bd · 2.0 ba · 1,944 sqft · Built 1981 · MultiFamily · Pending · 37 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,911/mo
• Mortgage (P&I): −$2,014
• Tax + insurance: −$537
• HOA: −$0
• Vac / Maint / Mgmt: −$821
• Net cashflow: $539/mo
• Annual: $6,462/yr
• Cap rate: 7.98%
• Cash-on-cash: 6.01%
• DSCR: 1.27
• 1% rule: 1.02%
• Cash to close: $107,520

Investor read

• This is a 2 × 2-bed/2.0-bath units multifamily listed at $384k.
• At list price, monthly cash flow is $539 ($6k/yr) — positive. Per door: $269/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($4k rent vs $384k).
• It's been on market 37 days — a 3% lower offer ($372k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $372k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $12k of value loss. Plan a longer hold.
• Location reads 63/100 on livability (#745 in FL) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+; Watch: employment D+, amenities F, commute F.
• Manatee (suburban): math 54% / reading 50% proficiency, ranked #26 of 73 in FL (top 36%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Palmetto Elementary School (math 53% / reading 34%, grade F, #1,345 of 2,144 statewide, top 64%, 570 students, 78% FRL); Palmetto High School (math 22% / reading 36%, grade F, #456 of 667 statewide, top 68%, 2,100 students, 61% FRL) — zoned schools average 70% FRL vs 51% district-wide (19 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Zoned-school proficiency averages 36% at this address vs 52% district-wide (-16 pts) — the specific schools serving this property underperform the Manatee average; the district grade overstates school quality for this exact location.
• Market conditions: Rents soft (-3.0%/yr); 1160 active listings in the ZIP; 11 comparable units currently listed for rent nearby; rentals at typical pace (median 25d on market — plan ~3-4 weeks tenant-placement turnaround); solid renter incomes; 7,472 units permitted in Manatee County in 2024 (1,782 in 5+ unit buildings).
• Manatee County population projected at +43% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 sale attempts since 5y ago with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• Current owner paid $310k; 24% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Climate carrying-cost: severe wind risk, 99% chance of damaging wind over 30y; extreme-heat days projected 7→30/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 8.0% vs local median 4.5% in Memphis — 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 $3,911/mo this rent would consume 60% of the median local household income ($78k/yr) (locally 1193% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 37 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• 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.
• 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.