2551 N 40th St #2553

Milwaukee, WI 53210

$40,000D

4 bd · 2.0 ba · 2,330 sqft · Built 1914 · MultiFamily · Active · 67 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,221/mo
• Mortgage (P&I): −$210
• Tax + insurance: −$67
• HOA: −$0
• Vac / Maint / Mgmt: −$466
• Net cashflow: $1,478/mo
• Annual: $17,738/yr
• Cap rate: 50.64%
• Cash-on-cash: 158.37%
• DSCR: 8.05
• 1% rule: 5.55%
• Cash to close: $11,200

Investor read

• This is a 2 × 2-bed/1.0-bath units multifamily listed at $40k. Condition is rated poor.
• At list price, monthly cash flow is $1k ($18k/yr) — positive. Per door: $739/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $40k).
• It's been on market 67 days — a 6% lower offer ($38k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $38k (6.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $277 of loan paydown is wiped out by about $1k of value loss. Plan a longer hold.
• Location reads 81/100 on livability (#55 in WI, #1,534 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, cost of living A+; Watch: employment D+, schools F, crime F.
• Milwaukee School District (urban): math 10% / reading 18% proficiency, ranked #337 of 342 in WI (top 98%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 77% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1914 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+3.8%/yr); 144 active listings in the ZIP; 5 comparable units currently listed for rent nearby; rentals at typical pace (median 18d on market — plan ~3-4 weeks tenant-placement turnaround); 1,017 units permitted in Milwaukee County in 2024 (803 in 5+ unit buildings).
• Milwaukee County population projected at +4% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 2 sale attempts 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.
• At projected returns (-3.0% appreciation + 3.8% rent growth), your $11k cash investment doubles in ~1 year — after that, you're playing with house money.
• Cap rate 50.6% vs local median 5.1% in Milwaukee — 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 $2,221/mo this rent would consume 55% of the median local household income ($48k/yr) (locally 1730% 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 67 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?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• Built in 1914 — 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 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?

Repairs flagged (vision-AI assessment)

• Major: Exposed cabinets — Structural damage
• Major: Exposed plumbing — Structural damage
• Major: Exposed subfloor — Structural damage
• Major: Exposed frames — Structural damage
• Major: Peeling paint — Structural damage