611 S 7th Ave

Iowa City, IA 52240

$275,000D

5 bd · 3.0 ba · 1,512 sqft · Built 1936 · MultiFamily · Pending · 11 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,272/mo
• Mortgage (P&I): −$1,442
• Tax + insurance: −$479
• HOA: −$0
• Vac / Maint / Mgmt: −$477
• Net cashflow: $-127/mo
• Annual: $-1,520/yr
• Cap rate: 5.74%
• Cash-on-cash: -1.97%
• DSCR: 0.91
• 1% rule: 0.83%
• Cash to close: $77,000

Investor read

• This is a 2 × 2-bed/1-bath units multifamily listed at $275k.
• At list price, monthly cash flow is $-127 ($-2k/yr) — negative. Per door: $-63/mo.
• To cash-flow at today's rent, offer at most $253k (8.1% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $227k (17.4% below list).
• Only 11 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $227k (17.4% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $8k of value loss. Plan a longer hold.
• Location reads 86/100 on livability (#13 in IA, #450 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, cost of living A+.
• Iowa City Community School District (urban): math 65% / reading 70% proficiency, ranked #174 of 289 in IA (top 60%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Longfellow Elementary School (math 60% / reading 62%, grade B, #385 of 616 statewide, top 63%, 385 students, 57% FRL); Southeast Junior High School (math 64% / reading 68%, grade A-, #152 of 246 statewide, top 62%, 812 students, 50% FRL); Iowa City High School (math 62% / reading 73%, grade B, #186 of 336 statewide, top 57%, 1,599 students, 40% FRL) — zoned schools average 49% FRL vs 30% district-wide (19 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Watch-outs: built in 1936 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+6.3%/yr); 260 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 67% of comp listings sitting > 30 days — soft ceiling on asking rent; 714 units permitted in Johnson County in 2024 (158 in 5+ unit buildings).
• Johnson County population projected at +60% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Cap rate 5.7% vs local median 2.7% in Iowa City — 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 $2,272/mo this rent would consume 51% of the median local household income ($53k/yr) (locally 2852% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• 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 1936 — 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 A-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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.