1865 Melrose St

Klamath Falls, OR 97601

$150,000D

2 bd · 1.0 ba · 784 sqft · Built 1927 · SingleFamily · Pending · 223 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,084/mo
• Mortgage (P&I): −$787
• Tax + insurance: −$186
• HOA: −$0
• Vac / Maint / Mgmt: −$228
• Net cashflow: $-116/mo
• Annual: $-1,395/yr
• Cap rate: 5.36%
• Cash-on-cash: -3.32%
• DSCR: 0.85
• 1% rule: 0.72%
• Cash to close: $42,000

Investor read

• This is a 2-bed/1.0-bath single-family listed at $150k.
• At list price, monthly cash flow is $-116 ($-1k/yr) — negative.
• To cash-flow at today's rent, offer at most $129k (13.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $108k (27.8% below list).
• It's been on market 223 days — a 12% lower offer ($132k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $108k (27.8% 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 $4k of value loss. Plan a longer hold.
• Location reads 78/100 on livability (#67 in OR, #2,703 nationally) — a middle-class / working-renter tenant base. Strengths: commute A+, cost of living A+, housing A+; Watch: crime F, employment F.
• Klamath Falls City Schools (town): math 26% / reading 40% proficiency, ranked #36 of 58 in OR (top 62%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 62% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Roosevelt Elementary School (math 54% / reading 34%, grade F, #143 of 412 statewide, top 38%, 316 students, 88% FRL); Ponderosa Middle School (math 27% / reading 41%, grade F, #71 of 128 statewide, top 56%, 565 students, 88% FRL); Klamath Union High School (math 15% / reading 64%, grade F, #69 of 143 statewide, top 54%, 645 students, 89% FRL) — zoned schools average 89% FRL vs 62% district-wide (27 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Watch-outs: built in 1927 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+3.1%/yr); 493 active listings in the ZIP; 13 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 100% of comp listings sitting > 30 days — soft ceiling on asking rent; 232 units permitted in Klamath County in 2024 (72 in 5+ unit buildings).
• Klamath County population projected at -12% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 2 sale attempts; this cycle's ask has dropped $40k (21%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Cap rate 5.4% vs local median 3.4% in Klamath Falls — 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

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• It's been on market 223 days. Have you received any prior offers? Is the seller open to a 28% concession, seller financing, or rate buy-down credit?
• Built in 1927 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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 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?
• 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?
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?