5 Elliot Pl

Newport, RI 02840

$1,400,000C

7 bd · 3.0 ba · 3,358 sqft · Built 1870 · MultiFamily · Active · 21 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $13,341/mo
• Mortgage (P&I): −$7,342
• Tax + insurance: −$1,198
• HOA: −$0
• Vac / Maint / Mgmt: −$2,802
• Net cashflow: $2,000/mo
• Annual: $24,001/yr
• Cap rate: 8.01%
• Cash-on-cash: 6.12%
• DSCR: 1.27
• 1% rule: 0.95%
• Cash to close: $392,000

Investor read

• This is a 7-bed/3.0-bath multifamily listed at $1.40M.
• At list price, monthly cash flow is $2k ($24k/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 $1.33M (4.7% below list).
• It's been on market 21 days — a 2% lower offer ($1.38M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $1.33M (4.7% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $10k of loan paydown is wiped out by about $42k of value loss. Plan a longer hold.
• Location reads 78/100 on livability (#5 in RI, #2,367 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, health & safety A+; Watch: schools D-, cost of living F.
• Newport (suburban): math 10% / reading 20% proficiency, ranked #29 of 39 in RI (top 74%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Watch-outs: built in 1870 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+9.3%/yr); 134 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals at typical pace (median 24d on market — plan ~3-4 weeks tenant-placement turnaround); solid renter incomes; 94 units permitted in Newport County in 2024 (0 in 5+ unit buildings).
• Newport County population projected at -12% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 12 sale attempts since 24y 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 $1.20M; 17% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 8.0% rent growth), your $392k cash investment doubles in ~9 years — after that, you're playing with house money.
• Climate carrying-cost: severe wind risk, 80% chance of damaging wind over 30y; extreme-heat days projected 7→17/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 8.0% vs local median 2.1% in Newport — 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 $13,341/mo this rent would consume 186% of the median local household income ($86k/yr) (locally 1294% 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 1870 — 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 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?
• 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.