106-A 120th St #20803

Ocean City, MD 21842

$53,000D

2 bd · 2.0 ba · 1,104 sqft · Built 1987 · Condo · Active · 227 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,467/mo
• Mortgage (P&I): −$278
• Tax + insurance: −$627
• HOA: −$400
• Vac / Maint / Mgmt: −$518
• Net cashflow: $645/mo
• Annual: $7,737/yr
• Cap rate: 30.55%
• Cash-on-cash: 86.63%
• DSCR: 4.85
• 1% rule: 4.66%
• Cash to close: $14,840

Investor read

• This is a 2-bed/2.0-bath condo listed at $53k.
• At list price, monthly cash flow is $645 ($8k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $53k).
• It's been on market 227 days — a 12% lower offer ($47k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $47k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $366 of loan paydown is wiped out by about $2k of value loss. Plan a longer hold.
• Location reads 73/100 on livability (#125 in MD) — a middle-class / working-renter tenant base. Strengths: commute A+, health & safety A+, schools B+; Watch: cost of living C-, crime F.
• Worcester County Public Schools (town): math 30% / reading 44% proficiency, ranked #6 of 24 in MD (top 25%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: property tax is 4.0% of price; flood insurance adds $427/mo.
• Market conditions: 673 active listings in the ZIP; 3 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; solid renter incomes; 354 units permitted in Worcester County in 2024 (6 in 5+ unit buildings).
• Worcester County population projected to shrink 4% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• Current owner paid $30k; list at $53k implies a 74% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $15k cash investment doubles in ~3 years — after that, you're playing with house money.
• Climate carrying-cost: in FEMA flood zone AE (mandatory federal flood insurance); severe wind risk, 80% chance of damaging wind over 30y; extreme-heat days projected 7→18/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 30.5% vs local median 1.4% in Ocean City — 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.
• This rent runs 37% of the median local income ($80k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• It's been on market 227 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Property tax is high relative to price — has the assessment been appealed recently, and will the sale trigger a re-assessment?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Any open or pending special assessments — roof, HVAC, plumbing, elevator, façade? What's the per-unit balance and payoff schedule, and is the seller paying it off at close or rolling it to the buyer?
• 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 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?