560 Kentucky St

Gary, IN 46402

$6,500D

3 bd · 1.0 ba · 1,080 sqft · Built 1924 · SingleFamily · Pending · 2 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,416/mo
• Mortgage (P&I): −$34
• Tax + insurance: −$25
• HOA: −$0
• Vac / Maint / Mgmt: −$297
• Net cashflow: $1,060/mo
• Annual: $12,718/yr
• Cap rate: 201.95%
• Cash-on-cash: 698.77%
• DSCR: 32.09
• 1% rule: 21.79%
• Cash to close: $1,820

Investor read

• This is a 3-bed/1.0-bath single-family listed at $6k.
• 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 ($1k rent vs $6k).
• Only 2 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $45 of loan paydown is wiped out by about $195 of value loss. Plan a longer hold.
• Location reads 73/100 on livability (#105 in IN) — a middle-class / working-renter tenant base. Strengths: commute A+, cost of living A+, housing A+; Watch: schools F, crime F, employment F.
• Gary Community School Corporation (urban): math 3% / reading 11% proficiency, ranked #299 of 301 in IN (top 99%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 80% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: property tax is 4.1% of price; built in 1924 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 47 active listings in the ZIP; 11 comparable units currently listed for rent nearby; rentals at typical pace (median 22d on market — plan ~3-4 weeks tenant-placement turnaround); lower-income renter base — watch delinquency; 1,642 units permitted in Lake County in 2024 (14 in 5+ unit buildings).
• Lake County population projected to shrink 7% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $2k cash investment doubles in ~1 year — after that, you're playing with house money.
• Climate carrying-cost: severe wildfire risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 201.9% vs local median 9.1% in Gary — 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 $1,416/mo this rent would consume 51% of the median local household income ($34k/yr) (locally 336% 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 1924 — 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.
• 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.