20220 Spencer St

Detroit, MI 48234

$179,000D-

4 bd · 1.5 ba · 1,893 sqft · Built 1941 · SingleFamily · Active · 36 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,532/mo
• Mortgage (P&I): −$939
• Tax + insurance: −$181
• HOA: −$0
• Vac / Maint / Mgmt: −$322
• Net cashflow: $91/mo
• Annual: $1,091/yr
• Cap rate: 6.90%
• Cash-on-cash: 2.18%
• DSCR: 1.10
• 1% rule: 0.86%
• Cash to close: $50,120

Investor read

• This is a 4-bed/1.5-bath single-family listed at $179k.
• At list price, monthly cash flow is $91 ($1k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $153k (14.4% below list).
• It's been on market 36 days — a 3% lower offer ($174k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $153k (14.4% 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 $5k of value loss. Plan a longer hold.
• Location reads 73/100 on livability (#218 in MI) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, cost of living A+; Watch: crime F, employment F.
• Detroit Public Schools Community District (urban): math 10% / reading 24% proficiency, ranked #499 of 540 in MI (top 92%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 90% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Marion Law Academy (math 5% / reading 15%, grade F, #1,230 of 1,397 statewide, top 91%, 362 students, 91% FRL); Detroit Lions Academy (math 5% / reading 5%, grade F, #488 of 493 statewide, top 100%, 123 students, 93% FRL); Osborn High School (math 5% / reading 15%, grade F, #659 of 713 statewide, top 97%, 407 students, 92% FRL) — zoned schools at 92% FRL track the district average.
• Watch-outs: built in 1941 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+6.7%/yr); 227 active listings in the ZIP; 8 comparable units currently listed for rent nearby; rentals at typical pace (median 27d on market — plan ~3-4 weeks tenant-placement turnaround); lower-income renter base — watch delinquency; 2,639 units permitted in Wayne County in 2024 (1,216 in 5+ unit buildings).
• Wayne County population projected at -17% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 8 sale attempts since 22y 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 $8k; list at $179k implies a 2138% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: major flood risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.9% vs local median 10.0% in Detroit — below-typical yield; the buyer is paying a premium for something (appreciation thesis, condition, location) that the cap rate doesn't capture.
• At $1,532/mo this rent would consume 52% of the median local household income ($35k/yr) (locally 2372% 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 36 days. Have you received any prior offers? Is the seller open to a 14% concession, seller financing, or rate buy-down credit?
• Built in 1941 — 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 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?
• 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?
• 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.