1827 Rainbow Dr

Cedar Falls, IA 50613

$189,900D-

2 bd · 1.0 ba · 1,145 sqft · Built 1945 · SingleFamily · Pending · 10 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,292/mo
• Mortgage (P&I): −$996
• Tax + insurance: −$281
• HOA: −$0
• Vac / Maint / Mgmt: −$271
• Net cashflow: $-255/mo
• Annual: $-3,065/yr
• Cap rate: 4.68%
• Cash-on-cash: -5.76%
• DSCR: 0.74
• 1% rule: 0.68%
• Cash to close: $53,172

Investor read

• This is a 2-bed/1.0-bath single-family listed at $190k.
• At list price, monthly cash flow is $-255 ($-3k/yr) — negative.
• To cash-flow at today's rent, offer at most $145k (23.8% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $129k (31.9% below list).
• Only 10 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $129k (31.9% 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 $6k of value loss. Plan a longer hold.
• Location reads 81/100 on livability (#60 in IA, #1,357 nationally) — a professional / high-income tenant draw. Strengths: cost of living A+, housing A+, health & safety A+; Watch: amenities D, commute F.
• Cedar Falls Community School District (urban): math 76% / reading 79% proficiency, ranked #45 of 289 in IA (top 16%) — strong family-tenant draw, lease renewals of 3-5y typical; only 18% free/reduced lunch — higher-income household profile.
• Zoned schools: Cedar Heights Elementary School (math 70% / reading 74%, grade A-, #181 of 616 statewide, top 34%, 474 students, 40% FRL); Peet Junior High School (math 79% / reading 80%, grade A+, #35 of 246 statewide, top 16%, 670 students, 27% FRL); Cedar Falls High School (math 74% / reading 78%, grade A-, #75 of 336 statewide, top 23%, 1,302 students, 24% FRL).
• Watch-outs: built in 1945 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+2.0%/yr); 387 active listings in the ZIP; 12 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 75% of comp listings sitting > 30 days — soft ceiling on asking rent; solid renter incomes; 287 units permitted in Black Hawk County in 2024 (67 in 5+ unit buildings).
• Black Hawk County population projected at +10% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 2 sale attempts since 7y 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 $137k; 39% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 4.7% vs local median 3.1% in Cedar 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?
• Built in 1945 — 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 A-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?
• 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.
• How much new for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.