42 Otsego Dr

Newport News, VA 23602

$218,500D-

3 bd · 1.5 ba · 1,152 sqft · Built 1986 · Townhouse · Active · 29 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,835/mo
• Mortgage (P&I): −$1,146
• Tax + insurance: −$304
• HOA: −$70
• Vac / Maint / Mgmt: −$385
• Net cashflow: $-71/mo
• Annual: $-847/yr
• Cap rate: 5.91%
• Cash-on-cash: -1.38%
• DSCR: 0.94
• 1% rule: 0.84%
• Cash to close: $61,180

Investor read

• This is a 3-bed/1.5-bath townhouse listed at $218k.
• At list price, monthly cash flow is $-71 ($-847/yr) — negative.
• To cash-flow at today's rent, offer at most $206k (5.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $184k (16.0% below list).
• It's been on market 29 days — a 2% lower offer ($215k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $184k (16.0% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $7k of value loss. Plan a longer hold.
• Location reads 75/100 on livability (#123 in VA, #4,018 nationally) — a middle-class / working-renter tenant base. Strengths: health & safety A+, cost of living A, housing A; Watch: crime F, commute F.
• Newport News City Public School District (urban): math 34% / reading 54% proficiency, ranked #112 of 131 in VA (top 86%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Kiln Creek Elementary (math 32% / reading 56%, grade F, #851 of 1,108 statewide, top 77%, 618 students, 93% FRL); Denbigh High (math 32% / reading 65%, grade D, #301 of 319 statewide, top 95%, 1,225 students, 65% FRL) — zoned schools average 79% FRL vs 55% district-wide (24 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: Rents rising fast (+13.2%/yr); 178 active listings in the ZIP; 19 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; 522 units permitted in Newport News city in 2024 (458 in 5+ unit buildings).
• Newport News County population projected to shrink 8% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 4 sale attempts since 3y 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 $180k; 21% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• 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 5.9% vs local median 4.2% in Newport News — 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?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are B-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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?
• 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.