2505 Jefferson St

Muskegon Heights, MI 49444

$110,000B

6 bd · 1.0 ba · 2,813 sqft · Built 1935 · MultiFamily · Pending · 74 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,960/mo
• Mortgage (P&I): −$577
• Tax + insurance: −$255
• HOA: −$0
• Vac / Maint / Mgmt: −$622
• Net cashflow: $1,507/mo
• Annual: $18,080/yr
• Cap rate: 22.73%
• Cash-on-cash: 58.70%
• DSCR: 3.61
• 1% rule: 2.69%
• Cash to close: $30,800

Investor read

• This is a 2×2bd/1.0ba + 1×3bd/1.0ba units multifamily listed at $110k.
• At list price, monthly cash flow is $2k ($18k/yr) — positive. Per door: $502/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $110k).
• It's been on market 74 days — a 6% lower offer ($103k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $103k (6.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $761 of loan paydown is wiped out by about $3k of value loss. Plan a longer hold.
• Location reads 61/100 on livability (#574 in MI) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A; Watch: schools D+, crime F, amenities F.
• Watch-outs: built in 1935 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 239 active listings in the ZIP; 438 units permitted in Muskegon County in 2024 (115 in 5+ unit buildings).
• Muskegon County population projected to shrink 8% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 2 sale attempts; this cycle's ask has dropped $10k (8%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $40k; list at $110k implies a 175% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $31k cash investment doubles in ~2 years — after that, you're playing with house money.
• Cap rate 22.7% vs local median 8.4% in Muskegon Heights — 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 $2,960/mo this rent would consume 67% of the median local household income ($53k/yr) (locally 930% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 74 days. Have you received any prior offers? Is the seller open to a 6% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1935 — 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?