937 Grove Ave

Racine, WI 53405

$206,900C+

3 bd · 2.0 ba · 1,361 sqft · Built 1900 · MultiFamily · Active · 79 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,341/mo
• Mortgage (P&I): −$1,085
• Tax + insurance: −$482
• HOA: −$0
• Vac / Maint / Mgmt: −$702
• Net cashflow: $1,072/mo
• Annual: $12,865/yr
• Cap rate: 12.51%
• Cash-on-cash: 22.21%
• DSCR: 1.99
• 1% rule: 1.61%
• Cash to close: $57,932

Investor read

• This is a 2 × 3-bed/2.0-bath units multifamily listed at $207k.
• At list price, monthly cash flow is $1k ($13k/yr) — positive. Per door: $536/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $207k).
• It's been on market 79 days — a 6% lower offer ($194k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $194k (6.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $6k of value loss. Plan a longer hold.
• Location reads 80/100 on livability (#58 in WI, #1,622 nationally) — a professional / high-income tenant draw. Strengths: commute A+, cost of living A+, housing A+; Watch: employment D.
• Racine Unified School District (urban): math 12% / reading 20% proficiency, ranked #335 of 342 in WI (top 98%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Zoned schools: Fratt Elementary (math 2% / reading 8%, grade F, #968 of 1,041 statewide, top 98%, 448 students, 75% FRL); Starbuck - An Ib World School (math 8% / reading 21%, grade F, #366 of 383 statewide, top 96%, 509 students, 62% FRL); Park High (math 6% / reading 11%, grade F, #465 of 483 statewide, top 96%, 1,038 students, 70% FRL).
• Watch-outs: built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 42 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); 505 units permitted in Racine County in 2024 (287 in 5+ unit buildings).
• Racine County population projected to shrink 7% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 13 sale attempts since 8y ago; this cycle's ask is 16452% above the opening price — seller raised mid-cycle; expect resistance to lowballs.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $58k cash investment doubles in ~6 years — after that, you're playing with house money.
• Cap rate 12.5% vs local median 3.9% in Racine — 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 $3,341/mo this rent would consume 58% of the median local household income ($69k/yr) (locally 430% 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 79 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 1900 — 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.
• Schools are D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.