2129 E Johnson St

Madison, WI 53705

$285,000B

5 bd · 2.0 ba · 1,448 sqft · Built 1927 · MultiFamily · Pending · 5 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,208/mo
• Mortgage (P&I): −$1,495
• Tax + insurance: −$724
• HOA: −$0
• Vac / Maint / Mgmt: −$884
• Net cashflow: $1,106/mo
• Annual: $13,275/yr
• Cap rate: 10.95%
• Cash-on-cash: 16.63%
• DSCR: 1.74
• 1% rule: 1.48%
• Cash to close: $79,800

Investor read

• This is a 5-bed/2.0-bath multifamily listed at $285k.
• At list price, monthly cash flow is $1k ($13k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($4k rent vs $285k).
• Only 5 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $9k of value loss. Plan a longer hold.
• Location reads 84/100 on livability (#39 in WI, #819 nationally) — a professional / high-income tenant draw. Strengths: commute A+, employment A+, housing A+.
• Madison Metropolitan School District (urban): math 35% / reading 40% proficiency, ranked #193 of 342 in WI (top 56%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Emerson Elementary (math 54% / reading 44%, grade D, #257 of 1,041 statewide, top 30%, 351 students, 57% FRL); East High (math 32% / reading 42%, grade F, #123 of 483 statewide, top 28%, 1,649 students, 55% FRL).
• Watch-outs: property tax is 2.5% of price; built in 1927 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+5.5%/yr); 62 active listings in the ZIP; 2 comparable units currently listed for rent nearby; solid renter incomes; 5,519 units permitted in Dane County in 2024 (3,978 in 5+ unit buildings).
• Dane County population projected at +35% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 sale attempts 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 $173k; list at $285k implies a 65% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 5.5% rent growth), your $80k cash investment doubles in ~7 years — after that, you're playing with house money.
• Climate carrying-cost: major flood risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 11.0% vs local median 2.4% in Madison — 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 $4,208/mo this rent would consume 57% of the median local household income ($89k/yr) (locally 1320% 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 1927 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Property tax is high relative to price — has the assessment been appealed recently, and will the sale trigger a re-assessment?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• 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.