314 Lester St

Waterloo, IA 50703

$85,000B

3 bd · 4.5 ba · 1,404 sqft · Built 1916 · MultiFamily · Active · 83 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,271/mo
• Mortgage (P&I): −$446
• Tax + insurance: −$122
• HOA: −$0
• Vac / Maint / Mgmt: −$477
• Net cashflow: $1,226/mo
• Annual: $14,711/yr
• Cap rate: 23.60%
• Cash-on-cash: 61.81%
• DSCR: 3.75
• 1% rule: 2.67%
• Cash to close: $23,800

Investor read

• This is a 3 × 1.0-bed/1.0-bath units multifamily listed at $85k.
• At list price, monthly cash flow is $1k ($15k/yr) — positive. Per door: $409/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $85k).
• It's been on market 83 days — a 6% lower offer ($80k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $80k (6.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $588 of loan paydown is wiped out by about $3k of value loss. Plan a longer hold.
• Location reads 81/100 on livability (#74 in IA, #1,589 nationally) — a professional / high-income tenant draw. Strengths: commute A+, cost of living A+, housing A+; Watch: schools C-, crime F, employment D-.
• Waterloo Community School District (urban): math 50% / reading 54% proficiency, ranked #276 of 289 in IA (top 96%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1916 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+6.7%/yr); 99 active listings in the ZIP; 14 comparable units currently listed for rent nearby; rentals at typical pace (median 23d on market — plan ~3-4 weeks tenant-placement turnaround); 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 3y ago; this cycle's ask has dropped $5k (6%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $68k; 26% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 6.7% rent growth), your $24k cash investment doubles in ~2 years — after that, you're playing with house money.
• Cap rate 23.6% vs local median 4.2% in Waterloo — 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 $2,271/mo this rent would consume 54% of the median local household income ($50k/yr) (locally 871% 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 83 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 1916 — 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.
• 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?
• 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.