226 Ellery Ave

Newark, NJ 07106-3520

$311,200C-

4 bd · 2.0 ba · 1,726 sqft · Built 1927 · SingleFamily · Under Contract · 30 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,072/mo
• Mortgage (P&I): −$1,632
• Tax + insurance: −$540
• HOA: −$0
• Vac / Maint / Mgmt: −$645
• Net cashflow: $255/mo
• Annual: $3,060/yr
• Cap rate: 7.28%
• Cash-on-cash: 3.51%
• DSCR: 1.16
• 1% rule: 0.99%
• Cash to close: $87,136

Investor read

• This is a 4-bed/2.0-bath single-family listed at $311k.
• At list price, monthly cash flow is $255 ($3k/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 $307k (1.3% below list).
• It's been on market 30 days — a 2% lower offer ($307k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $307k (1.5% below list) — sets the bar for market timing.
• In year one you build about $11k of equity ($2k loan paydown + $9k appreciation (3.0% local appreciation)).
• Location reads 67/100 on livability (#343 in NJ) — a middle-class / working-renter tenant base. Strengths: commute A+, amenities A-; Watch: schools D+, housing D+, crime F.
• Newark Public School District (urban): math 9% / reading 26% proficiency, ranked #452 of 472 in NJ (top 96%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 79% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1927 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 1 active listings in the ZIP; 29 comparable units currently listed for rent nearby; rentals at typical pace (median 18d on market — plan ~3-4 weeks tenant-placement turnaround); 3,364 units permitted in Essex County in 2024 (2,551 in 5+ unit buildings).
• Essex County population projected at +3% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• Current owner paid $105k; list at $311k implies a 196% gain — meaningful room to come down on a strong offer.
• At projected returns (3.0% appreciation + 3.0% rent growth), your $87k cash investment doubles in ~6 years — after that, you're playing with house money.
• By year 4, paydown + projected appreciation supports a ~$39k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: major wind risk, 27% chance of damaging wind over 30y; extreme-heat days projected 7→15/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 7.3% vs local median 3.0% in Newark — 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.

Questions for listing agent

• Built in 1927 — 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 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?
• 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.
• 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.
• How much new for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.