517 W Lexington Ave

Elkhart, IN 46516

$225,000B-

5 bd · 4.0 ba · 2,379 sqft · Built 1925 · MultiFamily · Active · 140 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,096/mo
• Mortgage (P&I): −$1,180
• Tax + insurance: −$544
• HOA: −$0
• Vac / Maint / Mgmt: −$860
• Net cashflow: $1,512/mo
• Annual: $18,146/yr
• Cap rate: 14.65%
• Cash-on-cash: 29.86%
• DSCR: 2.33
• 1% rule: 1.82%
• Cash to close: $63,000

Investor read

• This is a 3 × 4-bed/3.0-bath units multifamily listed at $225k.
• At list price, monthly cash flow is $2k ($18k/yr) — positive. Per door: $504/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($4k rent vs $225k).
• It's been on market 140 days — a 12% lower offer ($198k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $198k (12.0% below list) — sets the bar for market timing.
• 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 68/100 on livability (#224 in IN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: amenities C-, schools F, crime F.
• Elkhart Community Schools (urban): math 18% / reading 25% proficiency, ranked #271 of 301 in IN (top 90%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Watch-outs: flood insurance adds $56/mo; built in 1925 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 146 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 484 units permitted in Elkhart County in 2024 (136 in 5+ unit buildings).
• Elkhart County population projected at +7% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 2 sale attempts since 4y 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 $185k; 22% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $63k cash investment doubles in ~5 years — after that, you're playing with house money.
• Climate carrying-cost: severe flood risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 14.7% vs local median 4.0% in Elkhart — 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 $4,096/mo this rent would consume 87% of the median local household income ($56k/yr) (locally 995% 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 140 days. Have you received any prior offers? Is the seller open to a 12% 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 1925 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• 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 F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?